TaxTMI Updates e-Newsletter
Oct 15,2020

Absence of reasons in an adjudicatory order - application of mind - principles of natural justice / opportunity of hearing - confiscation under Section 130 of the Goods and Services Tax Act - Form GST MOV-10 - notice proposing confiscation and column for overruling objections - Form GST MOV-11 - order of confiscation and requirement to record reasons - presumption from non-speaking orders - remand for fresh adjudication

Absence of reasons in an adjudicatory order - application of mind - Form GST MOV-11 - order of confiscation and requirement to record reasons - presumption from non-speaking orders - Validity of the confiscation orders (Exts.P4 and P4(a)) in light of the absence of reasons and whether they reflect an application of mind - HELD THAT: - The Court found that although statements were recorded from the drivers and the manager, the impugned orders do not reflect any consideration of the objections/explanations given in response to the notices issued in Form GST MOV-10. Form GST MOV-10 itself contains a column for stating reasons for overruling objections, and paragraph 2 of Form GST MOV-11 contemplates enclosure of the notice contents along with the order, over and above the need for reasons in the order. The learned Government Pleader conceded that Exts.P4 and P4(a) did not contain a statement of reasons and only enclosed the sheets that accompanied the notices. In the absence of reasons, the Court drew the well established presumption that the adjudicating authority did not apply its mind. The Court relied on established authority for the proposition that a non speaking order suggests non-application of mind and is vitiating of the order [Kranti Associates (P) Ltd. v. Masood Ahmed Khan and the Gujarat High Court decisions referred to in the judgment ]. Accordingly, the confiscation orders were quashed for failure to record reasons and to reflect consideration of the assessee's objections. [Paras 4, 5]

Exts.P4 and P4(a) are quashed on the ground that they do not reflect an application of mind or contain reasons addressing the objections/explanations of the petitioner.

Principles of natural justice / opportunity of hearing - Form GST MOV-10 - notice proposing confiscation and column for overruling objections - remand for fresh adjudication - Whether the matter requires reconsideration and fresh hearing before the adjudicating authority - HELD THAT: - Because the orders were quashed for being non speaking and not evidencing consideration of the objections, the Court remanded the matter to the adjudicating authority for fresh consideration. The petitioner was directed to appear on the specified date and was permitted to produce material in support of its contentions; the adjudicating authority was directed to hear the petitioner and pass fresh reasoned orders within a week of the hearing. The remand is for fresh adjudication on merits after giving an adequate opportunity and recording reasons in the order. [Paras 6]

Matter remanded to the 1st respondent for fresh hearing and reasoned orders after affording the petitioner an opportunity to be heard and to produce material; directions given for specified hearing and timeline for fresh orders.

Final Conclusion: The confiscation orders (Exts.P4 and P4(a)) are quashed for want of reasons and non application of mind; the matter is remanded to the adjudicating authority for fresh consideration after hearing the petitioner and for passing reasoned orders within the timeframe directed by the Court.

Profiteering under GST - deposit of principal profiteered amount in installments - stay of interest and penalty proceedings - interim deposit directions pending challenge - National Anti Profiteering Authority - notice and interlocutory filing directions

Deposit of principal profiteered amount in installments - profiteering under GST - Direction to deposit the principal amount found to have been profiteered. - HELD THAT: - The Court, while entertaining the writ petition challenging the NAPA order dated 07th July, 2020 which held that the petitioner had profiteered during the period 01st January, 2019 to 07th February, 2019, directed the petitioner to deposit the principal profiteered amount (net of GST already deposited) in six equated installments commencing 02nd November, 2020. The direction is interlocutory and was issued in view of earlier orders in related matters cited to the Court, balancing the challenge to NAPA's finding with the necessity of preserving the reliefs ordered by NAPA pending adjudication of the petition.

Petitioner directed to deposit the principal profiteered amount in six equated installments commencing 02nd November, 2020.

Stay of interest and penalty proceedings - interim deposit directions pending challenge - Interim treatment of interest and penalty directions issued by NAPA. - HELD THAT: - The Court stayed the directions relating to interest and the initiation or continuation of penalty proceedings contained in the impugned NAPA order until further orders. This stay was made while leaving the principal amount deposit directive intact, thereby separating the interim treatment of the principal from ancillary monetary consequences pending final adjudication of the writ petition.

Interest amount directed to be paid and penalty proceedings stayed until further orders.

Notice and interlocutory filing directions - interim procedural directions - Procedural directions regarding service, filing of affidavits and written submissions and interim exemption application. - HELD THAT: - The Court issued notice to the respondents and directed filing of counter-affidavits within two weeks and any rejoinder before the next date. The petitioner's application for exemption (C.M.No.25518/2020) was allowed subject to exceptions. Parties were directed to file short written submissions not exceeding five pages at least one week prior to the next hearing, and the matter was listed for further hearing on 03rd November, 2020. These directions are interlocutory and concern case management and preservation of issues for final hearing.

Notice issued; counter-affidavits and rejoinders directed to be filed; exemption application allowed subject to exceptions; parties to file short written submissions and matter listed for hearing.

Final Conclusion: Interim order: petitioner directed to deposit the principal amount found to be profiteered in six equated installments commencing 02nd November, 2020; directions as to interest and penalty proceedings stayed pending further orders; procedural directions issued for filings and listing on 03rd November, 2020.

Extension of registration period for a casual taxable person under Section 27 of the GST Act - discretion of proper officer to extend registration on sufficient cause - filing of returns and claim of input tax credit by holder of expired registration

Extension of registration period for a casual taxable person under Section 27 of the GST Act - discretion of proper officer to extend registration on sufficient cause - filing of returns and claim of input tax credit by holder of expired registration - Whether the registration period granted to the petitioner as a casual taxable person should be extended for a limited period to enable filing of returns and claiming input tax credit where the petitioner could not access the online portal owing to expiry of registration during the Covid-19 pandemic. - HELD THAT: - The court noted that Section 27 contemplates that registration issued to a casual taxable person is valid for the period specified or 90 days and that a proper officer may extend that period on sufficient cause shown. The petitioner held a registration for the limited period 25.2.2020 to 31.03.2020 and issued invoices during that period but, due to the Covid-19 pandemic, was unable to complete the work and could not access the online portal to apply for extension because the registration had expired. Although the statutory extension period has elapsed, the court accepted that the petitioner's inability to access the system owing to expiry of registration during exceptional pandemic circumstances amounted to sufficient cause for relief limited to enabling compliance. Excluding the period during which the petitioner could not access the system, the court directed a short, two week extension from receipt of the judgment to permit the petitioner to upload invoice details, file returns and claim input tax credit, and directed the respondents to facilitate that exercise within the two week period.

Registration extended for two weeks from receipt of this judgment to enable uploading of invoice details, filing of returns and claiming of input tax credit; respondents to facilitate the exercise; writ petition disposed.

Final Conclusion: The writ petition was allowed to the limited extent of directing a two week extension of the petitioner's expired casual registration from the date of receipt of the judgment to enable filing of returns and claiming of input tax credit; respondents directed to facilitate compliance and the petition disposed.

Refund of IGST paid on export - drawback claim misclassification - interest on delayed refund - precedential effect of Division Bench judgment

Refund of IGST paid on export - drawback claim misclassification - precedential effect of Division Bench judgment - interest on delayed refund - Entitlement to refund of IGST paid on export where drawback claim was inadvertently entered in the wrong column, and entitlement to interest on such refund. - HELD THAT: - The writ petition sought direction for refund of IGST paid on export from August 2017 which was withheld because the petitioner had inadvertently mentioned the drawback claim under column A instead of column B. The Court relied on the final Division Bench decision in M/s. Amit Cotton Industries (Special Civil Application No.20126 of 2018) which addressed the same issue and directed refund of IGST with 7% simple interest. The respondent-department did not dispute the legal proposition laid down in that precedent. Applying the binding precedent, the Court allowed the petition and directed respondents to refund the IGST claimed by the petitioner and to pay interest at 7% as ordered in the earlier decision. [Paras 4, 6]

Petition allowed; respondents directed to refund the IGST claimed and to pay 7% interest, the refund to be made within four weeks.

Final Conclusion: The writ petition is allowed in terms of the Division Bench precedent; the respondents are directed to refund the IGST claimed by the petitioner and to pay interest at 7%, the refund to be made within four weeks.

Anticipatory bail under Section 438 of the Criminal Procedure Code - power to arrest under Section 69 of the Central Goods and Services Tax Act, 2017 - cognizable and non-bailable offence under Section 132(1)(b) and (c) read with Section 132(5) of the CGST Act - fraudulent input tax credit / circular trading - distinction between assessment proceedings and criminal prosecution under the CGST Act - necessity of custody to prevent tampering with evidence

Anticipatory bail under Section 438 of the Criminal Procedure Code - cognizable and non-bailable offence under Section 132(1)(b) and (c) read with Section 132(5) of the CGST Act - fraudulent input tax credit / circular trading - power to arrest under Section 69 of the Central Goods and Services Tax Act, 2017 - necessity of custody to prevent tampering with evidence - Pre-arrest bail application of applicant no.1 (husband/active partner) is rejected. - HELD THAT: - On the material placed on record and file-notings the Court found prima facie that the firm availed substantial Input Tax Credit on invoices allegedly issued by a sole supplier without proof of receipt, movement (no e-way bills), or payment. The supplier has lodged an FIR alleging forged invoices and the applicant admitted in statements that goods were not received and payments were not made; those admissions have not been retracted. The Court rejected the submission that prosecution can be launched only after completion of assessment, holding that the chapters dealing with offences and assessment are distinct and prosecution is not rendered nugatory by pending assessment. The Commissioner had 'reason to believe' commission of offences under Section 132(1)(b) and (c) and is empowered under Section 69 to authorise arrest. Given the prima facie findings and the risk of evidence disappearing or being tampered with, custody was held to be necessary and the exercise of discretion under Section 439 CrPC in favour of applicant no.1 was refused. [Paras 14, 15, 18, 19, 21]

Reject anticipatory bail of applicant no.1.

Anticipatory bail under Section 438 of the Criminal Procedure Code - fraudulent input tax credit / circular trading - distinction between active and dormant/sleeping partner for grant of bail - conditions collateral to grant of pre-arrest bail - Pre-arrest bail application of applicant no.2 (wife / dormant partner) is allowed subject to conditions. - HELD THAT: - Material on record indicated that applicant no.2 is a dormant/sleeping partner and a housewife not involved in day-to-day business. The Court concluded that custody of applicant no.2 would not further the investigation and, balancing the interests of investigation and personal circumstances, granted pre-arrest bail on furnishing bond/surety (and permitted cash bail in view of the pandemic) subject to standard conditions of furnishing residence/contact particulars, responding to summonses, not tampering with evidence, and cooperating with investigation. [Paras 20]

Grant anticipatory bail to applicant no.2 on specified conditions.

Final Conclusion: On the admitted facts and prima facie material, anticipatory bail of the active partner (applicant no.1) is refused because custody was held necessary to prevent tampering with evidence and because the Commissioner had reason to believe commission of cognizable offences; anticipatory bail of the dormant partner (applicant no.2) is granted subject to conditions including bond/surety (or cash bail), provision of contact particulars, cooperation with investigation and prohibition on tampering with evidence.

Settlement of cases under Chapter XIX-A - finality of settlement by Settlement Commission - scope of inquiry and practicability remark in settlement orders - participation of Revenue in settlement proceedings - powers and immunity of the Settlement Commission - writ jurisdiction as discretionary equitable remedy

Finality of settlement by Settlement Commission - scope of inquiry and practicability remark in settlement orders - participation of Revenue in settlement proceedings - Whether an isolated observation in the Settlement Commission's order that 'it is not practicable for the Commission to examine the records and investigate the cases for proper settlement' vitiates the settlement and permits reopening by Revenue. - HELD THAT: - The Court examined the record and observed that the Settlement Commission had called for and considered the report of the Commissioner (the Revenue's representative) and that the Revenue participated in the proceedings and did not object to the order when it was passed. The Commission accepted a substantial additional disclosure by the assessees and passed the settlement before the statutory cut-off date, failure to do which would have caused abatement. There was no allegation or material before the Court of misconduct by members of the Settlement Commission or of absence of material consideration. The impugned sentence was construed as an expression that further examination was not necessary because the matter was straightforward on the record and the objective of the settlement had been achieved. In that factual matrix, allowing a single isolated sentence to defeat the legislative objective of finality in settlements and to reopen a concluded settlement would be impermissible. The Court also took into account the discretionary and equitable nature of writ jurisdiction and the need to balance competing interests, concluding that Revenue's belated technical challenge, raised after lapse of time, could not be allowed to unsettle a concluded settlement where the Commission had the records, the Revenue had been heard and accepted the settlement without protest.

The isolated observation did not vitiate the settlement; the petition challenging the Settlement Commission's order was disposed of.

Final Conclusion: The High Court declined to set aside the Settlement Commission's order dated 28.03.2008 in respect of assessment years commencing 2000-01 to 2006-07, holding that an isolated remark about practicability did not invalidate a settlement where the Commission had the records, the Revenue had participated and the settlement achieved finality; the petition is disposed of.

Deduction under Section 80IB - project-based entitlement under Section 80IB(10) - proportionate deduction for individual units

Deduction under Section 80IB - proportionate deduction for individual units - The Tribunal was not justified in denying proportionate deduction under Section 80IB for profits attributable to residential units with built-up area below 1500 sq.ft. - HELD THAT: - The High Court answered the substantial question of law against the revenue and in favour of the assessee, upholding the Tribunal's direction to the Assessing Officer to allow proportionate deduction under Section 80IB to the extent of profits attributable to such units. The Court disposed of the appeal by reference to the reasons recorded in the related order (ITA No. 54/2013) and accepted the conclusion reached by the Tribunal and Commissioner (Appeals). No separate, novel principle of law was formulated in this judgment beyond the adoption of the Tribunal's and appellate authority's conclusion. [Paras 2]

Proportionate deduction under Section 80IB was to be allowed for profits attributable to units having built-up area below 1500 sq.ft.; decision affirmed in favour of the assessee.

Project-based entitlement under Section 80IB(10) - proportionate deduction for individual units - The contention that deduction under Section 80IB(10) is exclusively project-based and that there is no concept of proportionate deduction was rejected. - HELD THAT: - The Court rejected the revenue's legal contention that Section 80IB(10) operates strictly on a project basis so as to preclude any proportionate deduction for individual units. By answering the admitted substantial question against the revenue, the Court sustained the view that proportionate deduction could be permitted as directed by the lower authorities. The Court's determination rests on and adopts the reasoning given in the concurrently referenced order (ITA No. 54/2013). [Paras 2]

The project-based construction of Section 80IB(10) does not preclude allowing a proportionate deduction for individual units as directed by the Tribunal and Commissioner (Appeals); question answered in favour of the assessee.

Final Conclusion: The substantial questions of law admitted were answered against the revenue and in favour of the assessee; the revenue's appeal under Section 260A is dismissed and the directions to allow proportionate deduction under Section 80IB (including in relation to units below 1500 sq.ft. and notwithstanding a project-based reading of Section 80IB(10)) are affirmed.

Charitable purpose - proviso to Section 2(15) - exclusion for activities in the nature of trade, commerce or business or rendering services for a fee - exemption under Section 11 - general public utility - statutory constitution and control of area/urban development authority under the Gujarat Town Planning and Urban Development Act, 1976 - sale of up to 15% of town planning scheme land for funding infrastructural development is not profiteering - regulatory cess/fees incidental to statutory functions not amounting to rendering services in relation to trade or business

Proviso to Section 2(15) - exclusion for activities in the nature of trade, commerce or business or rendering services for a fee - charitable purpose - general public utility - Whether the activities of the Area Development/Urban Development Authority fall within the proviso to Section 2(15) and thus are excluded from 'charitable purpose'. - HELD THAT: - The Court applied the reasoning of the Division Bench in Ahmedabad Urban Development Authority and related authorities, considering the statutory scheme under the Gujarat Town Planning and Urban Development Act, 1976, including the constitution, powers and functions of an Area/Urban Development Authority and the objects of town planning schemes. The authority is a statutory body constituted and controlled by the State Government, its receipts (including proceeds from sale of land and regulatory fees) are required to be applied for development of the area and are subject to audit and control. The proviso to Section 2(15) applies only where an entity is engaged in activities that are genuinely in the nature of trade, commerce or business or renders services in relation to trade or business for a fee; incidental or statutory receipts raised to fulfil the statutory object and devoted to public utility do not transform the entity's objects into trade or commerce. The sale of plots up to 15% as envisaged in the town planning scheme is intended to generate resources for infrastructure and is to be read conjointly with other statutory provisions; it is not a profiteering activity. Similarly, the collection of cess/fees being regulatory and incidental to the statutory functions does not make the activities business like for the purposes of the proviso. Applying these principles to the respondent, the Court held that the activities are for general public utility and not in the nature of trade, commerce or business, and thus the proviso to Section 2(15) is not attracted.

Proviso to Section 2(15) does not apply to the respondent; its activities qualify as charitable purpose / general public utility.

Sale of up to 15% of town planning scheme land for funding infrastructural development is not profiteering - exemption under Section 11 - Whether proceeds from sale of plots (to the extent permitted under the town planning scheme) and other receipts disqualify the authority from claiming exemption under Section 11. - HELD THAT: - Relying on statutory provisions of the Town Planning Act and the reasoning in Ahmedabad Urban Development Authority, the Court observed that the allotment and sale of a limited portion of land under the scheme is devised to generate funds solely for provision of infrastructure and public amenities. The mechanism of public auction and statutory controls prevent favoritism and ensure realization of market value, and the funds are required to be applied for development purposes. Given the statutory control, mandated application of receipts to the authority's object, and audit safeguards, such receipts are incidental and do not convert the authority's activities into commercial operations. Consequently, the respondent remains entitled to exemptions available under Section 11.

Proceeds from permitted sale of plots and incidental receipts do not disentitle the authority from exemption under Section 11.

Regulatory cess/fees incidental to statutory functions not amounting to rendering services in relation to trade or business - proviso to Section 2(15) - exclusion for activities in the nature of trade, commerce or business or rendering services for a fee - Whether collection of regulatory cess or fees by the authority constitutes rendering of services in relation to trade, commerce or business attracting the proviso to Section 2(15). - HELD THAT: - The Court held that regulatory cess and fees collected in discharge of statutory functions are incidental to the authority's object of urban development and are not equivalent to providing services in relation to trade or commerce for consideration. The nature, scope and purpose of such collections - being regulatory and intended for application toward public infrastructure and subject to statutory control - preclude treating them as commercial activities under the proviso. The CBDT circular and judicial precedents were applied to emphasise that only activities genuinely of a commercial nature, judged on facts such as nature, scope, extent and frequency, would attract the proviso.

Regulatory cess/fees incidental to statutory functions do not amount to rendering services in relation to trade or business and do not invoke the proviso to Section 2(15).

Final Conclusion: The appeal is dismissed. Substantial questions of law are answered in favour of the assessee: the respondent Area/Urban Development Authority's activities are for charitable purpose and general public utility; the proviso to Section 2(15) is not attracted by the sale of up to 15% of scheme land or by regulatory fees/cess; accordingly the respondent is entitled to exemption under Section 11.

Charitable purpose - proviso to Section 2(15) - exemption under Section 11 - activity in the nature of trade, commerce or business - activity of rendering services for a fee or cess - Town Planning Scheme and sale of salable plots to fund infrastructure - control and audit by State Government - principle of mutuality

Charitable purpose - proviso to Section 2(15) - exemption under Section 11 - activity in the nature of trade, commerce or business - Town Planning Scheme and sale of salable plots to fund infrastructure - Whether the activities of Ahmedabad Urban Development Authority (AUDA) attract the proviso to Section 2(15) as being in the nature of trade, commerce or business or rendering services for a fee, and whether AUDA is entitled to exemption under Section 11 of the Income Tax Act for AY 2012-13. - HELD THAT: - The Court applied the statutory scheme under the Gujarat Town Planning and Urban Development Act, 1976 to conclude that AUDA is a statutory body constituted to carry out development and redevelopment of urban areas and to prepare and implement town planning schemes. The Town Planning Scheme expressly provides for reservation and allotment of portions of land (including a limited salable portion) to generate resources for providing public infrastructure (roads, drainage, water supply, parks, social infrastructure etc.). The sale of up to fifteen per cent of the total area is intended to raise funds to be applied solely for the development of the urban development area and is conducted by public auction to avoid favoritism and to secure maximum market value. The Court relied on the decision of the Hon'ble Supreme Court (Ahmedabad Green Belt Khedut Mandal) which held that such sale for funding infrastructure is not profiteering. The CBDT Circular explaining the proviso to Section 2(15) and the principle of mutuality were applied: only activities that are truly in the nature of trade, commerce or business or the rendering of services for a fee (with the character of commerciality) are excluded from charitable purpose. Given AUDA's statutory objects, State control over its constitution and functions, the requirement that proceeds be used for public infrastructure, and statutory audit and oversight, the Court held there is no element of profiteering or commerciality that would attract the proviso to Section 2(15). On that basis AUDA's activities amount to provision of general public utility and the proviso is not attracted; consequently AUDA is entitled to exemption under Section 11 for the assessment year in question. [Paras 4, 5, 6, 12, 15]

The proviso to Section 2(15) does not apply to AUDA; AUDA's activities are for charitable purposes/general public utility and AUDA is entitled to exemption under Section 11 for AY 2012-13.

Final Conclusion: The appeal by Revenue is dismissed; substantial questions of law are answered in favour of the assessee (AUDA) and against the Revenue, and AUDA is held entitled to exemption under Section 11 for AY 2012-13.

Revision under Section 263 of the Income Tax Act - assessment framed after due verification - order held erroneous and prejudicial to the interest of Revenue - scope of exercise of power under Section 263 - special audit under Section 142(2A) of the Income Tax Act - transactions covered by Section 40A(2)(b)

Revision under Section 263 of the Income Tax Act - scope of exercise of power under Section 263 - Validity of the Pr. CIT's suo motu revision order under Section 263 quashing the assessment as erroneous and prejudicial to the interest of Revenue. - HELD THAT: - The Appellate Tribunal examined the assessment proceedings and the record before the Assessing Officer, including the notice under Section 142(1) calling for details of fixed assets, unsecured and secured loans, confirmations and ledgers, and the assessee's replies. The Tribunal found that the AO had required and received comprehensive information (asset details, loan particulars, confirmations, ledgers and explanations on related party transactions) and had applied his mind before passing the assessment under Section 143(3). On that factual foundation the Tribunal concluded that the assessment could not be characterized as erroneous and prejudicial to the Revenue and that the Pr. CIT's exercise of revision under Section 263 was not justified. The High Court, after considering the Tribunal's reasoning and reliance placed by it on judicial precedents, agreed with the Tribunal's factual findings and legal conclusion that the conditions for invoking Section 263 were not satisfied.

The Pr. CIT's order under Section 263 quashing the assessment was unjustified; the Tribunal's setting aside of the revision order is upheld.

Assessment framed after due verification - transactions covered by Section 40A(2)(b) - special audit under Section 142(2A) of the Income Tax Act - Whether the Assessing Officer conducted necessary enquiries and applied mind in relation to fixed assets, unsecured loans, current liabilities and related party transactions covered by Section 40A(2)(b). - HELD THAT: - The Tribunal recorded that the AO issued specific queries in the Section 142(1) notice and the assessee furnished detailed responses including annexed audit schedules, asset registers, confirmations of creditors, ledger extracts and explanations on related party transactions asserting market rates. The Tribunal held that these materials were available to and considered by the AO, evidencing due verification. The subsequent special audit and later proceedings under Sections 143(3) read with 142(2A) and 263 led to additions, but the Tribunal's factual finding was confined to the assessment stage and concluded that the AO had made necessary enquiries and applied his mind when framing the assessment. The High Court accepted this factual conclusion.

The AO had conducted necessary enquiries and applied mind; the finding that enquiries were not conducted was not sustained.

Final Conclusion: The High Court concurs with the Tribunal's factual findings and legal conclusion that the conditions for exercise of revision under Section 263 were not made out; the Revenue's appeal is dismissed.

Deemed export - export turnover - deduction under Section 10A - harmonious reading with the EXIM Policy - Special Economic Zones Act subject to Second Schedule modifications

Deemed export - export turnover - deduction under Section 10A - harmonious reading with the EXIM Policy - Whether supplies by the assessee to another STP/SEZ unit which were exported out of India by that recipient and yielded foreign exchange qualify as 'export turnover' for grant of deduction under Section 10A for AY 2009-10. - HELD THAT: - The Court held that the Income-tax Act must be read in the background of the EXIM Policy and the SEZ regime so as to give effect to the legislative purpose of encouraging exports. Following the reasoning in Tata Elxsi Ltd. and subsequent decisions, supplies from one STP/SEZ unit to another which result in export out of India and are directly attributable to foreign exchange receipt fall within the ambit of 'export turnover' and attract deduction under Section 10A. The Court examined Section 27 of the SEZ Act and the modifications in the Second Schedule (including insertion of Sub-section (7B) in Section 10A and Section 10AA) and concluded that these are the modifications contemplated by Section 27; they do not exclude the concept of 'deemed export' where the export is effected by another STP/SEZ unit and foreign exchange is attributable to that export. The decision in Electronic Controls and Discharge Systems (Kerala) was held distinguishable on facts (receipt in foreign exchange here) and for not considering the SEZ Act and related policy provisions; the Supreme Court authority relied upon by Revenue on incentive interpretation did not alter the conclusion because the primary question here was whether the transaction qualified as an 'export' (not a question of quantum of deduction). On these grounds the first substantial question of law was answered in favour of the assessee. [Paras 29, 31, 34, 35, 36]

Supreme Court concluded that the supplies to another STP unit which were exported and yielded foreign exchange constitute 'deemed export' and qualify as 'export turnover' for deduction under Section 10A; the appeal is allowed on this question.

Deduction under Section 10A - telecommunication/bandwidth expenses - Allowance of expenditure towards telecommunication (bandwidth and telephone) claimed under Section 10A was not finally decided and was remitted for fresh consideration. - HELD THAT: - The Court observed that the Tribunal affirmed the remand made by the CIT(A) on this factual issue and that no substantial question of law was entertained on it. The matter was left open for the Assessing Officer to decide on merits after affording the assessee an opportunity, since the issue principally involves factual determination and nexus to the export turnover. [Paras 3, 37]

This issue is remitted to the Assessing Officer for fresh decision on merits after giving the assessee an opportunity; no substantial question of law decided.

Final Conclusion: The tax appeal is allowed on the question whether supplies to another STP/SEZ unit which were exported and yielded foreign exchange qualify as 'export turnover' for deduction under Section 10A for AY 2009-10; the telecommunication expense claim is remitted to the Assessing Officer for fresh factual consideration.

Applicability of Section 50C(1) to leasehold rights - deeming provision interpretation - distinction between "land or building" and "any right in land or building" - scope of capital asset for section 50C

Applicability of Section 50C(1) to leasehold rights - distinction between "land or building" and "any right in land or building" - deeming provision interpretation - Whether Section 50C(1) is attracted to transfers of leasehold rights in land/building - HELD THAT: - Section 50C(1) applies where the transfer by an assessee is of a capital asset described as "land or building or both"; the text of that provision does not include "any right in land or building". The legislature in other provisions (for example section 54D(1)) expressly uses the phrase "any right in land or building", demonstrating that the omission in section 50C(1) is deliberate. Consequently the expression "land or building" in section 50C(1) is distinct from rights therein and does not, by plain wording, cover mere leasehold rights. The assessee's factual position - that only leasehold rights (90 year lease) were transferred - is on record (sale/ tripartite lease deeds supplied; DVO noted leasehold nature). The Tribunal found the distinction supported by precedents including GVK Industries Ltd. and coordinate and High Court/Tribunal decisions cited, and observed that the point was squarely within the controversy from the assessment stage and therefore admissible for adjudication. Applying the statutory text to the recorded facts, the Tribunal held that section 50C(1) was not attracted to the transfers of the leasehold rights in question and directed deletion of the addition made under section 50C. [Paras 9, 10, 11, 12, 13]

Section 50C(1) does not apply to the transfers of the leasehold rights in the six properties; the addition under section 50C is to be deleted and the Assessing Officer directed to give effect accordingly.

Final Conclusion: Appeal allowed: Tribunal held that transfers involved leasehold rights not covered by section 50C(1) and set aside the addition made under section 50C, directing the Assessing Officer to delete the addition for AY 2015-16.

Treatment of unexplained cash deposits as undisclosed income under the doctrine of unexplained credits (Section 69) - burden of proof to establish source and ownership of bank deposits - benefit of peak credit theory - remand for verification, examination and opportunity of hearing

Treatment of unexplained cash deposits as undisclosed income under the doctrine of unexplained credits (Section 69) - burden of proof to establish source and ownership of bank deposits - benefit of peak credit theory - remand for verification, examination and opportunity of hearing - Whether the addition of cash deposits in the assessee's bank account as undisclosed income can be sustained without affording the assessee an opportunity to prove that the account and deposits belonged to a third party and whether the claim for peak credit required adjudication by the Assessing Officer. - HELD THAT: - The Tribunal found that the bank account in the assessee's name existed and exhibited cash deposits made at places outside the State and cash withdrawals in the assessee's locality, which supported the assessee's assertion (backed by an affidavit of Shri Pramod Kumar Sundara) that the account was used to channel money for labourers and their families. While the legal burden to prove the source and ownership of deposits lies on the assessee, the Tribunal observed that the Assessing Officer's order did not record service or hearing in respect of notices and thus the assessee was not given a fair opportunity to substantiate the claim. In these circumstances the Tribunal held that the matter required fresh verification and examination by the AO, including confrontation and verification of the affidavit and supporting evidence, and consideration of the peak credit contention, rather than a straight confirmation of the addition. The Tribunal therefore restored the issue to the file of the AO for adjudication afresh, directing that the assessee be afforded due opportunity of hearing and that the AO examine the explanation, evidence of third party ownership, and the applicability of peak credit before concluding on the addition under the unexplained credits doctrine. [Paras 10, 11, 12]

Matter remanded to the Assessing Officer for verification, examination and adjudication of the explanation that the impugned account belonged to Shri Pramod Kumar Sundara, including consideration of the peak credit claim, after affording the assessee adequate opportunity of hearing; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the confirmation of the addition and remanded the sole issue to the Assessing Officer to verify ownership and source of the cash deposits, to consider the peak credit contention and to give the assessee an opportunity to substantiate the claim; appeal allowed for statistical purposes.

Setting up of business - distinction between setting up and commencement of business - real estate business set up on acquisition of land - allowability of revenue expenses incurred after business is set up - capitalisation as work-in-progress of project-related expenses - interest income taxable as business income only if inextricably connected or there is business compulsion

Setting up of business - real estate business set up on acquisition of land - distinction between setting up and commencement of business - The assessee's business of real estate development was held to have been set up. - HELD THAT: - The Tribunal accepted that the assessee acquired land from 2007 onwards for the purpose of real estate development and relied on co-ordinate-bench and High Court precedents distinguishing 'setting up' from 'commencement' of business in the context of real estate. Applying that reasoning, acquisition of land and related preparatory acts establish that the real estate business had been set up even though commercial recognition of revenue was deferred. Consequently, the view of the tax authorities that the business had not been set up was reversed and the AO was directed to treat the business as set up. [Paras 14]

The assessee's business is held to have been set up.

Allowability of revenue expenses incurred after business is set up - capitalisation as work-in-progress of project-related expenses - Revenue expenses incurred after the business was set up are allowable, but project-related costs must be capitalised into work-in-progress while other expenses are deductible; allocation to be verified by AO. - HELD THAT: - Having held that the business was set up, the Tribunal applied the settled principle that expenses incurred after setting up and when the business is ready to commence are deductible. However, noting that many expenses relate to construction and the project, the Tribunal held those project-related expenses should be taken to 'Work in Progress' while remaining expenses ought to be allowed as deduction. Where common expenses exist a rational bifurcation is required. Because the AO had not examined these segregations (the entire claim had been disallowed), the matter was restored to the AO for allocation after the assessee furnishes a bifurcated statement and after affording an opportunity of hearing. [Paras 15, 16, 18]

Expenses are allowable subject to segregation: project-related costs to be capitalised as work-in-progress and non-project expenses to be allowed; matter remanded to AO for allocation and determination.

Interest income taxable as business income only if inextricably connected or there is business compulsion - Interest income was rightly assessed under the head 'Income from Other Sources' for the relevant years. - HELD THAT: - The Tribunal followed its earlier coordinate-bench decision and noted that to characterise interest as business income the assessee must demonstrate that deposits or loans were inextricably connected with business operations or made under business compulsion. The assessee failed to show any business compulsion or that parking of funds/advancing of loans was integral to its real estate business. The Tribunal distinguished the Hewlett Packard decision relied upon by the assessee as fact-specific where parking of funds was held integral to export operations. Absent such nexus, the CIT(A)'s confirmation of assessment of interest as income from other sources was upheld for the years in issue. [Paras 19]

Assessment of interest income as income from other sources is confirmed.

Final Conclusion: Appeals partly allowed: the assessee's real estate business is held to have been set up (acquisitions from 2007); revenue expenses are allowable post-setup but project-related costs must be capitalised to work-in-progress while other expenses are deductible-allocation remanded to the AO; assessment of interest income as income from other sources is confirmed for the years under appeal.

Adjustment of refund against outstanding demand - stay of recovery subject to deposit and/or adjustment conditions - direction to Assessing Officer to effect adjustment of refunds - garnishee under section 226(3) of the Income Tax Act, 1961 - withdrawal of garnishee notices upon compliance - leverage for compliance in view of COVID-19 economic distress

Adjustment of refund against outstanding demand - direction to Assessing Officer to effect adjustment of refunds - Assessing Officer directed to adjust available refunds of earlier years towards amounts required to be deposited for grant of stay in the impugned assessment years. - HELD THAT: - The Tribunal noted that the assessee, instead of making the deposits ordered by the Tribunal in the stay order, sought adjustment of refunds arising from earlier allowed appeals. The Assessing Officer had already adjusted refund for AY 2011-12 but had not adjusted the refund for AY 2008-09. Having examined the material and the table of adjustments furnished by the assessee, and in view of the COVID-19 related financial difficulties, the Bench granted a limited administrative accommodation and directed the Assessing Officer to adjust the remaining shortfall for the impugned years against refund due for AY 2008-09, if any, and to report compliance to the Tribunal on the next date of hearing. The order also provided that if no refund for AY 2008-09 is due, the assessee must deposit the balance forthwith and file proof before the Bench. [Paras 6, 8]

Assessing Officer directed to adjust remaining amounts for the impugned assessment years against refund due for AY 2008-09 and to report compliance; if no refund is available, assessee to deposit the balance and produce proof.

Stay of recovery subject to deposit and/or adjustment conditions - leverage for compliance in view of COVID-19 economic distress - Stay of recovery in the earlier stay order remains conditional and comes into effect only after full compliance by deposit or adjustment as directed by the Tribunal. - HELD THAT: - The Tribunal reproduced its earlier operative stay order which granted stay of recovery subject to specified payments/adjustments and other conditions. While acknowledging the exceptional economic circumstances arising from the COVID-19 pandemic, the Bench allowed adjustment of refunds as a mode of complying with the deposit condition. However, the stay would commence only after the entire amount required by the stay order is deposited or adjusted, thereby preserving the conditional nature of the stay and the Tribunal's authority to vacate it on non-compliance. [Paras 5, 7, 8]

Stay of recovery remains conditional and will take effect only upon full deposit or adjustment in accordance with the Tribunal's stay order.

Garnishee under section 226(3) of the Income Tax Act, 1961 - withdrawal of garnishee notices upon compliance - Garnishee notices issued by the Department shall be withdrawn upon adjustment of refunds or deposit of the required amounts as directed by the Tribunal. - HELD THAT: - The Tribunal recorded that garnishee notices had been issued to the assessee's bankers. It ordered that once the adjustment of refunds or the deposit required under the stay order is effected, the Department shall withdraw the garnishee notices dated 13/01/2020. This links administrative enforcement action to compliance with the Tribunal's directions. [Paras 3, 9]

Department to withdraw the garnishee notices after adjustment/deposit in compliance with the Tribunal's directions.

Final Conclusion: Stay applications allowed on the terms directed: Assessing Officer to adjust available earlier-year refunds towards the deposit conditions for the impugned assessment years and report compliance; absent such refunds the assessee to deposit the balance; stay to operate only after full deposit/adjustment and garnishee notices to be withdrawn upon compliance.

Rectification under section 154 of the Income-tax Act - mistake apparent from record - application of section 115BBE to income referred to in sections 68 to 69D - surrender of income in search and seizure proceedings - taxability and rate of tax on surrendered/undisclosed income

Rectification under section 154 of the Income-tax Act - mistake apparent from record - application of section 115BBE to income referred to in sections 68 to 69D - surrender of income in search and seizure proceedings - Validity of the Assessing Officer's exercise of power under section 154 to revise tax computation by applying the amended rate under section 115BBE to surrendered cash. - HELD THAT: - The Assessing Officer invoked section 154 on the basis that (i) the case involved surrender of cash during search and seizure and therefore section 115BBE applied, (ii) the assessment had earlier applied tax at 30% on the surrendered amount and (iii) following amendment the correct rate should be 60%. The Tribunal examined the text of section 115BBE (pre- and post-amendment) and noted that both versions operate only where total income includes income referred to in sections 68-69D, either reflected in the return or determined by the Assessing Officer; neither version expressly treats every surrender in a search as automatically taxable under section 115BBE. The Tribunal then inspected the return and the assessment order and found that the assessee had computed tax on the surrendered amount at normal slab rates for an individual, and the assessment order contained no finding that the surrendered amount was assessed as income under sections 68-69D or that tax had been charged at 30% under section 115BBE. Because the prerequisite factual and legal foundation for invoking section 154 (a mistake apparent from the record) was absent - the asserted antecedent mistake (charging 30% under section 115BBE) was not borne out by the records - the AO's action to increase tax to 60% via rectification could not be sustained. The Tribunal therefore held that the AO exceeded the scope of section 154 and its order (as confirmed by the CIT(A)) was liable to be set aside. The Tribunal expressly did not resolve the broader question of the retrospective or prospective application of the 2016 amendment to section 115BBE, observing that the AO's default application of section 115BBE in search cases could not be accepted on the facts before it. [Paras 11, 12, 13, 14]

The Assessing Officer's rectification under section 154 to apply the revised rate under section 115BBE was not legally tenable and is set aside; the appeal is allowed.

Final Conclusion: The Tribunal set aside the order passed by the Assessing Officer under section 154 (as confirmed by the CIT(A)) insofar as it increased tax on the surrendered amount by applying the amended rate under section 115BBE; the appeal of the assessee is allowed.

Actuarial surplus/deficit - computation under Section 44 - Rule 2 of the First Schedule - consolidation of policyholders' and shareholders' accounts - tax neutrality of transfers between shareholders' and policyholders' accounts - treatment of shareholders' account income as part of life insurance business - impact of accounting treatment (100% depreciation) on actuarial surplus - incorporation of IRDA Regulations in computation rules - non-obstante effect of Section 44

Computation under Section 44 - Rule 2 of the First Schedule - incorporation of IRDA Regulations in computation rules - Whether actuarial valuation and computation of surplus/deficit must be made in accordance with Section 44 read with Rule 2 of the First Schedule and whether Rule 2 excludes IRDA Regulations. - HELD THAT: - The Tribunal examined earlier coordinate-bench decisions in the assessee's own case and concluded that the actuarial valuation 'made in accordance with the Insurance Act, 1938' means valuation under that framework as reflected in Rule 2. The Tribunal noted that Rule 5 (Part B) shows explicit reference to IRDA Regulations where intended, and thus Rule 2's continued reference to the Insurance Act, 1938 indicates the legislature's omission to incorporate IRDA by express reference in Rule 2. Applying the settled approach followed in the coordinate-bench precedents, the Tribunal found the assessee's actuarial computation to be in accordance with Rule 2 and Section 44, and that the assessing officer erred in treating the newer Regulation format as displacing the Rule 2 computation.

The impugned findings on interpretation and application of Section 44 read with Rule 2 are upheld; grounds challenging CIT(A)'s reliance on assessee's earlier-year decisions are dismissed.

Consolidation of policyholders' and shareholders' accounts - tax neutrality of transfers between shareholders' and policyholders' accounts - treatment of shareholders' account income as part of life insurance business - non-obstante effect of Section 44 - Whether surplus in shareholders' account and transfers between shareholders' and policyholders' accounts must be consolidated and taxed as part of life insurance business under Section 44 (and not separately as income from other sources). - HELD THAT: - Relying on the coordinate-bench reasoning, the Tribunal observed that although IRDA Regulations require separate maintenance of policyholders' and shareholders' accounts, the assessee carries on a single life-insurance business and incomes in the shareholders' account arise in furtherance of that business (e.g., to meet solvency requirements). Section 44 is a non-obstante provision prescribing that computation shall follow the First Schedule, thereby excluding other heads of income. The Tribunal held that transfers from shareholders' to policyholders' account are tax-neutral for the purpose of computing the actuarial surplus/deficit and that the correct method is to consolidate the accounts to arrive at the net surplus taxable under Section 44/First Schedule.

The CIT(A)'s conclusion to consolidate accounts and to treat transfers as tax-neutral is affirmed; the revenue's challenge to tax shareholders' account surplus separately is dismissed.

Impact of accounting treatment (100% depreciation) on actuarial surplus - actuarial surplus/deficit - computation under Section 44 - Whether the claim of 100% depreciation (resulting in assets being written off) is required to be disallowed for computation of actuarial surplus under Section 44/Rule 2 because such write offs reduce assets and thereby affect surplus. - HELD THAT: - Following earlier decisions in the assessee's own case, the Tribunal accepted that the assessee prepared accounts in the IRDA format, that the assets were capitalized and then written off pursuant to an accepted and consistently followed accounting policy permitting 100% depreciation, and that such treatment was recognised by IRDA. Given that taxation under Section 44 is presumptive and the First Schedule governs computation, only adjustments expressly prohibited under Section 44 can be disallowed. The Tribunal concluded that the CIT(A) correctly deleted the addition and that disallowance of depreciation was not warranted.

The deletion of the addition relating to the 100% depreciation claim is sustained; the revenue's ground is dismissed.

Treatment of shareholders' account income as part of life insurance business - actuarial surplus/deficit - non-obstante effect of Section 44 - Whether dividend or other incomes shown in the shareholders' account are taxable as exempt dividend under the general law or must be included as income of the life insurance business under Section 44 computation. - HELD THAT: - The Tribunal, following coordinate-bench precedent, held that incomes credited to the shareholders' account are integral to the single life-insurance business and form part of the income to be computed under the First Schedule pursuant to Section 44. Because Section 44 operates as a non-obstante clause, other heads of income do not apply for computation of insurance business profits; accordingly incomes in the shareholders' account should be taxed as part of life insurance business (and not separately under other heads). The Revenue did not place new evidence to distinguish the instant case from those precedents.

The CIT(A)'s treatment of shareholders' account incomes as part of life insurance business is upheld and the revenue's contrary contention is dismissed.

Final Conclusion: Applying coordinate-bench precedents in the assessee's own case, the Tribunal found no infirmity in the CIT(A)'s conclusions: (a) actuarial surplus/deficit must be computed under Section 44 read with Rule 2 as followed by the assessee; (b) shareholders' and policyholders' accounts are to be consolidated for computing net surplus and transfers between them are tax neutral; (c) 100% depreciation, as an accepted accounting policy, need not be disallowed for actuarial computation; and (d) incomes in the shareholders' account are taxable as part of the life insurance business. The revenue's appeal is dismissed.

Reopening under section 147/148 - requirement of tangible material and Assessing Officer's independent satisfaction - Jurisdictional objection to reassessment can be raised in subsequent round of litigation - Audit objections as borrowed satisfaction - Non-application of mind by Assessing Officer - Requirement to dispose objections to reopening by a speaking order - Invalidity of reassessment if reopened without fresh tangible material

Jurisdictional objection to reassessment can be raised in subsequent round of litigation - Assessee permitted to challenge the validity of reopening in the second round of litigation before the Commissioner (Appeals). - HELD THAT: - The Tribunal held that the question of reopening an assessment is legal and jurisdictional in nature and there is no bar to raise it in the second round even if it was not challenged before the AO or CIT(A) in the first round. The tribunal relied on precedent including the decision of the Bombay High Court in Inventors Industrial Corporation Ltd. v. CIT and other coordinate authority decisions to conclude that such a jurisdictional plea can be raised afresh; the fact that an additional ground had been filed before the Tribunal in the first round further supported the assessee's position. [Paras 12]

The issue of reopening could be raised in the second round and the Tribunal accepted that the jurisdictional objection was maintainable.

Reopening under section 147/148 - requirement of tangible material and Assessing Officer's independent satisfaction - Audit objections as borrowed satisfaction - Non-application of mind by Assessing Officer - Invalidity of reassessment if reopened without fresh tangible material - Reopening of assessment was invalid on merits as it was not based on any new tangible material and reflected non-application of mind, the reassessment being based on audit objections. - HELD THAT: - On examination of records the Tribunal found that the profit on sale of assets which formed the basis for reopening was disclosed in the audited P&L before the AO at the time of the original assessment under section 143(3); therefore no new and independent tangible material existed to justify reopening. The reasons recorded in the later proceedings differed from earlier reasons supplied, indicating non-application of mind. Further, the reassessment proceeded on the basis of audit objections (an office note showing reliance on audit party observations), which the Tribunal treated as borrowed satisfaction and held cannot by itself constitute tangible material to reopen an assessment. The Tribunal applied the principles in Kelvinator and subsequent case law to hold that reassessment without fresh tangible material and without AO's independent satisfaction is not tenable. [Paras 12, 13]

Reopening and consequent reassessment were held invalid on merits for lack of fresh tangible material and for being based on audit objections without independent application of mind.

Requirement to dispose objections to reopening by a speaking order - Failure by the Assessing Officer to dispose of the assessee's objections to reopening by a speaking order rendered the reassessment proceedings invalid. - HELD THAT: - The Tribunal noted that the assessee had filed objections to reopening during the set-aside proceedings and the AO's response merely stated that objections could not be entertained at that stage without giving reasons. The Tribunal accepted authorities which hold that framing an assessment without disposing of objections by a speaking order invalidates reassessment. Applying those precedents, the Tribunal concluded that non-disposal of objections by a reasoned order vitiated the reassessment. [Paras 13]

The reassessment was vitiated for failure to dispose of the assessee's objections by a speaking order.

Final Conclusion: The appeal by the Revenue is dismissed; the order of the Commissioner (Appeals) upholding invalidity of the reassessment is upheld. The assessee's cross-objection is dismissed as infructuous.

Reopening of assessment under section 148 - reassessment under section 147 - addition under section 68 (unexplained cash credit) - deemed dividend under section 2(22)(e) - limitation on making fresh additions when the basis for reopening is negatived

Reopening of assessment under section 148 - reassessment under section 147 - addition under section 68 (unexplained cash credit) - deemed dividend under section 2(22)(e) - limitation on making fresh additions when the basis for reopening is negatived - Validity of reassessments completed under section 143(3) read with section 147 where assessments were reopened on the basis of possible income under section 2(22)(e) but additions were made instead under section 68. - HELD THAT: - The Assessing Officer reopened the assessments for both years on the recorded reason that income by way of deemed dividend under section 2(22)(e) had escaped assessment. The assessment orders, however, did not make any addition under section 2(22)(e) and instead sustained additions only under section 68 for unexplained cash credits. Applying the principle in the jurisdictional decision referred to by the parties, where the basis for formation of belief for reopening is that a particular income has escaped assessment, the Assessing Officer is required to assess that income; if, during proceedings, it is accepted that that income has not escaped assessment, the Assessing Officer cannot proceed to make independent additions on a different ground which was not the basis for reopening. The Assessing Officer in the present matters failed to satisfy the requisite condition for making reassessment on a different ground and completed reassessments by making additions on an issue not recorded as the reason to reopen. In view of these facts and the uncontroverted position in the record, the reassessments are invalid and liable to be cancelled. Consequent grounds become academic. [Paras 7, 8]

Reassessments for A.Y. 2006-07 and A.Y. 2009-10 completed under section 143(3) r.w.s. 147 are cancelled as void insofar as additions were made under section 68 contrary to the basis recorded for reopening.

Final Conclusion: Both appeals are allowed and the reassessment orders for the specified assessment years are set aside as the Assessing Officer made additions on a ground different from the one recorded as the basis for reopening; other grounds raised by the assessee are rendered academic.

Exemption under section 11 - proviso to section 2(15) - advancement of object of general public utility - dominant intention / profit motive - principle of mutuality - registration under section 12A

Exemption under section 11 - proviso to section 2(15) - advancement of object of general public utility - dominant intention / profit motive - principle of mutuality - registration under section 12A - Assessee entitled to exemption under section 11 for assessment year 2015-16 - HELD THAT: - The Assessing Officer denied exemption under section 11 invoking the proviso to section 2(15) on the ground that the assessee, a trade association, received fees from non members and thus carried out activities in the nature of trade or business. The Tribunal examined the objects, the continued registration under section 12A, and the Coordinate Bench's earlier detailed decision in the assessee's own case for earlier assessment years, which held that (i) objects promoting a trade or industry can still amount to advancement of an object of general public utility; (ii) the proviso to section 2(15) applies only where the activity is in the nature of trade, commerce or business or rendering services related thereto and such activity is motivated by profit; and (iii) mere receipt of fees or incidental commercial receipts, or existence of surplus, is not sufficient to infer profit motive. The Tribunal found no finding or material placed by the Revenue showing a dominant profit motive in the assessee's activities for the year under consideration, and that services rendered (including to members and non members) were incidental to its objects of promoting the rubber industry. Further, the principle of mutuality did not preclude charitable character merely because some receipts arise from member dealings. In view of the absence of any evidence of profit motive and in conformity with the Coordinate Bench precedent, the Tribunal held that the proviso to section 2(15) did not strip the assessee of exemption and that the CIT(A)'s allowance of exemption under section 11 should be upheld. [Paras 6, 7]

Tribunal affirms CIT(A)'s allowance of exemption under section 11 and dismisses the Revenue's appeal.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against the CIT(A)'s order for assessment year 2015-16, holding that the proviso to section 2(15) does not apply in the absence of a dominant profit motive and upholding the assessee's entitlement to exemption under section 11 (with due regard to registration under section 12A and the Coordinate Bench's prior findings).

Undertaking to pay - liberty to apply for waiver - discretion to decide waiver in accordance with law - consequence of breach-auction of containers - disposal of writ petition subject to earlier order

Undertaking to pay - Receipt of interim payment and acceptance of the petitioner's undertaking to pay the balance within four weeks. - HELD THAT: - The Court recorded that the petitioner paid a sum on 30th September, 2020 and that counsel for respondent no.2 confirmed receipt. The petitioner's undertaking to pay the balance amount (and any additional demurrage) within four weeks was accepted by the Court and the petitioner was held bound by that undertaking. This acceptance operates as a binding court-recorded commitment by the petitioner. [Paras 2, 3, 5]

Interim payment acknowledged and the petitioner's undertaking to pay the balance within four weeks accepted and enforced by the Court.

Liberty to apply for waiver - discretion to decide waiver in accordance with law - Petitioner granted liberty to apply to respondent no.2 for waiver of charges and respondent no.2 directed to decide such application in accordance with law. - HELD THAT: - The petitioner was given leave and liberty to file an application for waiver with respondent no.2 after making the payment. The Court expressly recorded that any such application shall be decided by Container Corporation of India Limited in accordance with law, thereby leaving the merits of waiver to the statutory decision-making process while permitting the petitioner to seek relief under the respondent's policy. [Paras 4, 5]

Liberty granted to the petitioner to apply for waiver; respondent no.2 to decide the application in accordance with law.

Consequence of breach-auction of containers - Respondent no.2 authorised to auction the petitioner's nine containers forthwith in the event of breach of the undertaking. - HELD THAT: - The Court imposed a specific consequence for non-compliance with the accepted undertaking: respondent no.2 shall be at liberty to auction the nine containers forthwith if the petitioner fails to fulfil the commitment. This direction preserves respondent no.2's right to take possession and auction as a remedy for non-payment without further interim orders. [Paras 6]

On breach of the undertaking, respondent no.2 is entitled to auction the nine containers forthwith.

Disposal of writ petition subject to earlier order - Writ petition disposed of with pending application, subject to the order passed in W.P.(C) No.13099/2018. - HELD THAT: - The Court disposed of the present writ petition and its pending application on the terms recorded (payment, undertaking, liberty to apply for waiver and consequence of breach). The disposal was made expressly subject to the earlier order in W.P.(C) No.13099/2018, preserving any operative effect of that earlier order on the present matter. [Paras 7, 8]

Writ petition disposed of on recorded terms and is subject to the order in W.P.(C) No.13099/2018.

Final Conclusion: The Court accepted the petitioner's interim payment and undertaking to pay the balance within four weeks, permitted the petitioner to seek waiver from respondent no.2 to be decided in accordance with law, authorised respondent no.2 to auction the nine containers if the undertaking is breached, and disposed of the writ petition (with pending application) subject to the earlier order in W.P.(C) No.13099/2018.

Mis-declaration of goods - Classification of imported goods - Re-determination of transaction value under Rule 12 of the Customs Valuation Rules, 2007 - Confiscation under Section 111(m) of the Customs Act, 1962 - Redemption fine - Penalty under Section 112(a) of the Customs Act, 1962 - Special Import License requirement under para 2.17 of the FTP, 2009

Mis-declaration of goods - Classification of imported goods - Re-determination of transaction value under Rule 12 of the Customs Valuation Rules, 2007 - Special Import License requirement under para 2.17 of the FTP, 2009 - Declaration in the Bill of Entry was held to be incorrect insofar as a portion of the imported consignment consisted of serviceable old and used aluminium pipes, warranting re-classification and rejection of the declared transaction value. - HELD THAT: - The Tribunal accepted the departmental finding that 13.5 MT out of the consignment comprised old and used aluminium pipes classifiable under the tariff heading for pipes and subject to a different duty rate and import restriction. Given the discrepancy between the declared description and the goods found on physical examination, the transaction value as declared was rejected under the valuation rules and the value was re-determined treating the goods as serviceable used pipes. The appellant failed to produce plausible evidence before the authorities or the Tribunal to substantiate the original declaration. The imported pipes also fell within the restricted category under para 2.17 of FTP, 2009 requiring a Special Import License which was not produced at importation; that regulatory requirement reinforced the adverse departmental conclusion on classification and admissibility.

The Tribunal upheld the re-determination of value, the re-classification of the goods as serviceable used pipes, and the finding of mis-declaration; the appellant's challenge to these factual and valuation findings was rejected.

Confiscation under Section 111(m) of the Customs Act, 1962 - Redemption fine - Penalty under Section 112(a) of the Customs Act, 1962 - The orders of confiscation, grant of option to redeem on payment of a redemption fine, levy of penalty, and demand of differential duty were sustained. - HELD THAT: - In consequence of the upheld finding of mis-declaration and re-classification, the Tribunal found the imposition of confiscation under Section 111(m) and the offer of redemption on payment of the stated fine to be within the statutory consequences. Similarly, the imposition of penalty under Section 112(a) and the demand for differential duty arising from the re-determined value were held to be legally sustainable. The appellant's absence of credible evidence to counter the departmental findings left the authorities' orders unassailable on the record before the Tribunal.

The confiscation, redemption fine, penalty and differential duty demands as upheld by the Commissioner (Appeals) were sustained and not interfered with by the Tribunal.

Final Conclusion: The appeal was dismissed; the Tribunal upheld the departmental findings on mis-declaration, re-classification and re-determination of value, and sustained the orders of confiscation (with option of redemption), penalty and demand of differential duty.

Corporate Insolvency Resolution Process - proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 - default - limitation - bona fide dispute - misuse of the Code as a debt recovery mechanism - object of the Code is revival and resolution, not recovery - proof of default

Limitation - default - Whether the Section 7 petitions are time barred by limitation - HELD THAT: - The Tribunal found that the alleged disbursements/cheques were issued in 2006-2010 while the demand notices were served only in 2017. Applying the settled position that the limitation period for initiating proceedings under the Code is three years from the date of default, the claims in the three petitions were held to be barred by limitation. The Tribunal adverted to the legislative position and precedents recognising that the Limitation Act applies to proceedings under the Code and concluded that the petitioners' delay precludes admission of the petitions. [Paras 28]

Petitions barred by limitation and therefore not maintainable on that ground.

Proof of default - bona fide dispute - misuse of the Code as a debt recovery mechanism - object of the Code is revival and resolution, not recovery - Whether the petitions disclose an undisputed debt entitling admission under Section 7 or whether there exists a pre existing dispute / lack of proof of default - HELD THAT: - On the materials placed before it, the Tribunal noted absence of a formal written agreement fixing the contractual rate claimed by the petitioners, the existence of cheques and offered payments by the corporate debtor which were not encashed, the corporate debtor's pleaded payment/interest at a different rate, and the company's audited financials showing profitability. Relying on authority that the Code is intended for revival/resolution and not as a substitute for debt recovery, the Tribunal concluded that a real dispute existed as to the debt and its terms and that there was no conclusive proof of a default capable of triggering CIRP. The Tribunal treated the filings as indicative of a family/business dispute and misuse of the insolvency process for recovery of disputed dues. [Paras 29, 30, 33, 35]

There is a pre existing dispute and no uncontested proof of default; petitions cannot be admitted under Section 7.

Corporate Insolvency Resolution Process - misuse of the Code as a debt recovery mechanism - Relief to be granted where petitions are mala fide or intended as recovery proceedings - HELD THAT: - The Tribunal recorded that the corporate debtor tendered demand drafts / cheques in court showing willingness to pay, which were refused by the petitioners; this conduct reinforced the view that the petitions were tactical attempts to recover disputed sums rather than to seek resolution. While noting that the facts might attract penal consequences under the Code, the Tribunal declined to initiate penal proceedings but rejected the petitions on merits and imposed exemplary costs payable to the Prime Minister's Relief Fund (COVID 19 Care). The Tribunal indicated that grievances of oppression/management disputes are for other fora under the Companies Act. [Paras 31, 32, 36, 37, 38]

Petitions rejected; exemplary costs awarded; parties free to pursue appropriate civil or company law remedies.

Final Conclusion: The three Section 7 petitions were dismissed: they were time barred, disclosed pre existing disputes and lacked conclusive proof of default, amounted to misuse of the insolvency process for recovery, and were therefore rejected with exemplary costs payable to the Prime Minister's Relief Fund (COVID 19 Care).

Liquidation as a matter of last resort - corporate insolvency resolution process - implementation of resolution plan - forfeiture of deposits for non-implementation of resolution plan - stay of impugned appellate order - interim conditional reinstatement of resolution process

Liquidation as a matter of last resort - implementation of resolution plan - forfeiture of deposits for non-implementation of resolution plan - stay of impugned appellate order - Whether the NCLAT order upholding liquidation should be stayed to permit conditional implementation of the approved Resolution Plan subject to upfront payment and forfeiture terms. - HELD THAT: - The Court proceeded on the established premise that liquidation under the Insolvency and Bankruptcy Code is to be resorted to only as a last measure and that the statute embodies a public interest in resolving corporate insolvencies rather than merely recovering dues. The appellant had earlier obtained approval of its Resolution Plan but implementation was alleged to have failed, leading to liquidation. The appellant and certain members of the erstwhile Committee of Creditors had reached an understanding on 25 February 2020 whereby the appellant would make an upfront payment and, failing full performance, certain amounts already deposited would be forfeited. The appellant has already deposited a portion of the sums agreed and has furnished an affidavit accepting the forfeiture liability. On the facts and prima facie showing of willingness to perform, the Court found it appropriate to afford the appellant one final opportunity to demonstrate ability to implement the Plan. Conditional interim relief was granted by staying the operation of the impugned order, staying the auction, and directing the appellant to deposit the stipulated upfront amount within the specified time; the Court expressly warned that failure to comply in whole or in part would result in forfeiture of the amounts already deposited without further recourse. [Paras 6, 7, 8, 9, 10]

The NCLAT order is stayed; the appellant is directed to deposit the stipulated upfront amount by the date fixed and, until further orders, the auction is stayed; failure to comply will result in forfeiture of amounts already deposited.

Final Conclusion: Interim stay granted on the NCLAT order; appellant given a final opportunity to implement the approved Resolution Plan subject to upfront deposit and forfeiture conditions, and auction proceedings stayed pending further orders.

Presumption against retrospective operation of statutes - prospective application of delegated notification raising minimum default for initiation of CIRP - substantive right to file application under Section 9 vis-a -vis procedural amendment - application under Section 9-requirements for admission (demand notice, default, affidavit, bank statement, absence of pre-existing dispute, eligibility of proposed IRP) - limitations on imputing retrospective effect to notifications in absence of clear language

Prospective application of delegated notification raising minimum default for initiation of CIRP - presumption against retrospective operation of statutes - limitations on imputing retrospective effect to notifications in absence of clear language - Notification dated 24.03.2020 specifying Rs. one crore as minimum amount of default is prospective and does not apply to applications pending before the Adjudicating Authority at the time of notification. - HELD THAT: - The Tribunal examined the text and tenor of the notification issued under the proviso to Section 4 and found no express or necessary implication that the notification was intended to operate retrospectively. Applying the presumption that statutes and delegated legislation are prospective unless a contrary intention appears, the Tribunal held that absent clear language to that effect the notification cannot be read to divest rights or defeat pending proceedings. The Tribunal further observed that applying the notification retrospectively to pending applications would lead to anomalous and wider complications. On these bases the notification was held prospective and not applicable to Section 9 applications filed before 24.03.2020. [Paras 56, 57]

The notification of 24.03.2020 is prospective and does not apply to pending applications under the Code filed prior to its issuance.

Application under Section 9-requirements for admission (demand notice, default, affidavit, bank statement, absence of pre-existing dispute, eligibility of proposed IRP) - substantive right to file application under Section 9 vis-a -vis procedural amendment - The Adjudicating Authority correctly admitted the Section 9 application after finding that the operational creditor satisfied the statutory ingredients for admission and that there was no pre-existing dispute or payment after service of the demand notice. - HELD THAT: - On the record the operational creditor produced the demand notice, affidavit and bank statement as required by Section 9(3)(b) and (c), the proposed IRP had no disciplinary proceedings, and the Adjudicating Authority recorded that the corporate debtor did not raise a bona fide dispute and had not effected payment after receipt of the demand notice. The Tribunal, applying the statutory scheme that an application meeting the conditions of Section 9 is to be admitted subject to Sections 9(2)-9(5), concluded that the admission was legally sustainable and free from infirmity. [Paras 48, 55]

The admission of the Section 9 petition was lawful as the statutory requirements for initiation of CIRP were fulfilled and no pre-existing dispute or payment after demand was established.

Final Conclusion: The Appellate Tribunal dismissed the appeal, upholding the Adjudicating Authority's admission of the Section 9 application and holding that the Ministry's notification of 24.03.2020 operates prospectively and does not affect applications filed before that date.

Classification of debt as financial debt or operational debt - admission and quantum of claim by the Resolution Professional - ownership and inclusion of leased assets in the corporate debtor's assets pool - inclusion of lease rentals as Insolvency Resolution Process Costs (CIRP costs) - obligation to return leased equipment and allocation of repair and removal costs - prohibition on arbitrary penal measures by the Resolution Professional

Classification of debt as financial debt or operational debt - admission and quantum of claim by the Resolution Professional - ownership and inclusion of leased assets in the corporate debtor's assets pool - Validity of the Resolution Professional's reclassification of the applicant from a financial creditor to an operational creditor and the large reduction of the admitted claim. - HELD THAT: - The Adjudicating Authority noted that its earlier order dated 17.07.2019 did not record any specific finding directing reclassification of the applicant's debt as operational debt or authorising the drastic reduction of the admitted claim to the figure now communicated by the RP. The earlier order had recorded that a sum had been admitted and had directed the RP to reconsider the differential amount after verifying the corporate debtor's books. The Tribunal finds that the unilateral reduction of the applicant's admitted claim on the pretext of that earlier order is unfair and not sustainable. Similarly, the reliance on observations in the earlier order to reclassify the applicant as an operational creditor is not sustainable because no conclusive finding on classification was made; the earlier order in fact recognised that the scheduled equipment is owned by the applicant and not assets of the corporate debtor. Consequently the RP's reclassification and arbitrary reduction of admitted claim are invalid to the extent they depart from the admissions and directions recorded earlier and from the absence of a definitive finding on classification. [Paras 7, 8, 9]

The RP's reclassification of the applicant as an operational creditor and the reduction of the admitted claim on the basis of the earlier order are not sustained; the RP must respect the admitted amount subject to reconsideration only as directed earlier and cannot rely on the cited order to effect the impugned reclassification or arbitrary reduction.

Obligation to return leased equipment and allocation of repair and removal costs - inclusion of lease rentals as Insolvency Resolution Process Costs (CIRP costs) - prohibition on arbitrary penal measures by the Resolution Professional - Rights and obligations relating to handing over of the scheduled equipment, responsibility for repairs and removal costs, imposition of penalty for non-removal, and inclusion of lease rentals as CIRP costs during the CIRP period. - HELD THAT: - The Tribunal found that the equipment remains on the corporate debtor's premises and is not in working condition; the RP had invited the applicant to remove the equipment but also sought to levy an excessive penalty for non-removal. The applicant had earlier offered to remove the equipment at its cost (letter dated 21.11.2018) thereby waiving strict enforcement of the clause that required the lessee to hand over the equipment in working order. Given the physical impediment to removal (damaged railway track), the Tribunal directed the RP to effect necessary repairs to the railway track (limited to minor repairs required for transportation) and held that the cost of repairing the railway track shall be borne by the corporate debtor while the cost of removal and transportation shall be borne by the applicant as previously offered. The Tribunal also directed that no penalty be levied for the continued presence of the equipment on the corporate debtor's premises, characterising the proposed charge as exorbitant and arbitrary. Further, because the equipment remained on the corporate debtor's premises and was thereby deemed to be used by the corporate debtor during the CIRP, the Tribunal directed the RP to include lease rentals as CIRP costs from the insolvency commencement date until the date the railway tracks are made ready for removal of the equipment by the applicant. [Paras 10, 11, 12, 13]

RP to arrange for railway-track repairs (costs to be borne by the corporate debtor), applicant to bear removal and transportation costs, no penalty to be charged for retention of equipment, and lease rentals from 29.08.2018 until the tracks are made ready are to be included as CIRP costs.

Final Conclusion: Application IA No.994/2019 disposed of: the RP's reclassification and arbitrary reduction of the applicant's claim are not upheld; the RP is directed to comply with the earlier direction to reconsider the differential amount where appropriate, to repair the railway tracks (cost borne by the corporate debtor) to enable removal of equipment by the applicant (removal costs borne by the applicant), not to impose the proposed penalty, and to include lease rentals from the CIRP commencement date until the equipment can be removed as part of CIRP costs.

Initiation of Corporate Insolvency Resolution Process under Insolvency & Bankruptcy Code - pre-existing dispute - operational debt - plausible dispute test from Mobilox - crystallization of debt

Pre-existing dispute - plausible dispute test from Mobilox - crystallization of debt - Whether the petition to initiate CIRP was maintainable in view of a pre-existing dispute raised by the Corporate Debtor. - HELD THAT: - The Tribunal found that the Corporate Debtor had consistently disputed the Petitioner's claim from 2015 onwards by email communications and in replies to the demand notices. Applying the Mobilox standard, the adjudicating authority is required only to determine whether a plausible dispute exists which is not a patently feeble or spurious defence. The Bench held that the Corporate Debtor's contentions regarding the quantum and basis of the claimed referral fee constituted a plausible, pre-existing dispute and that there was no crystallized debt due and payable in the absence of agreed terms. Consequently, the CIRP petition was not maintainable. [Paras 8, 9, 10]

Petition dismissed for want of crystallized debt due to a pre-existing plausible dispute; CIRP initiation refused.

Operational debt - crystallization of debt - Whether the claimed 'referral fee' constituted an operational debt payable by the Corporate Debtor such that CIRP could be initiated. - HELD THAT: - The Tribunal observed that the claim was for referral fees which were not founded on any concluded agreement between the parties. Although payment was discussed and offers were made subject to conditions (including unconditional acceptance and waiver of further claims), there was no mutual acceptance creating an enforceable operational debt. Given the absence of agreed terms and the contemporaneous disputes recorded in emails, the claim did not stand as a crystallized operational debt enforceable through the Code at the stage of the petition. [Paras 2, 8, 9]

Claim held not to be an established operational debt; therefore not a ground to initiate CIRP.

Final Conclusion: The petition under the Code was dismissed as the claim for referral fees was disputed prior to the demand notice and was not a crystallized operational debt; no costs.

Admission of petition under section 9 of the Insolvency & Bankruptcy Code, 2016 - jurisdiction of Adjudicating Authority over corporate debtor - enforceability and binding nature of a foreign arbitral award in India - pre-existing dispute arising from pendency/challenge to an arbitral award - authority of constituted attorney and power of attorney to file insolvency petition - initiation of corporate insolvency resolution process and imposition of moratorium

Jurisdiction of Adjudicating Authority over corporate debtor - This Bench has jurisdiction to adjudicate the petition against the Corporate Debtor. - HELD THAT: - The Corporate Debtor is a company incorporated in Maharashtra with its registered office in Mumbai; therefore, the Adjudicating Authority (NCLT Mumbai Bench) is competent to deal with the petition that seeks initiation of CIRP against that Corporate Debtor. The Tribunal so records and proceeds to decide the petition on merits. [Paras 2]

Jurisdictional objection rejected and Bench assumes jurisdiction.

Enforceability and binding nature of a foreign arbitral award in India - A foreign arbitral award is not per se binding in India unless it is enforceable under the Arbitration and Conciliation Act, 1996; however, the Award in the present case was treated as capable of execution because the United Kingdom is a reciprocating territory and there is no challenge to the Award in a manner known to law. - HELD THAT: - The Tribunal reviews Sections 46, 47, 48 and 49 of the Arbitration and Conciliation Act, 1996 and relevant authorities to note the general principle that a foreign award becomes binding in India only upon satisfaction of enforceability criteria. The Corporate Debtor's contention that the foreign award cannot be relied upon unless declared enforceable is recognised as correct in law in principle. The Tribunal, however, also observes that the United Kingdom is notified as a reciprocating territory under the Code of Civil Procedure and that no legal challenge to the Award has been filed or is pending in a manner known to law; on that admitted position the Tribunal holds that the Award cannot be treated as a pre-existing dispute preventing admission. [Paras 12, 15, 17, 36, 37]

Legal principle that foreign awards require enforcement under Indian law is acknowledged, but on the facts (no challenge pending and reciprocating-territory status) the award is not a bar to admission.

Pre-existing dispute arising from pendency/challenge to an arbitral award - There is no pre-existing dispute which bars the section 9 petition because no challenge to the Arbitral Award is pending in a manner known to law. - HELD THAT: - The Tribunal examines the Corporate Debtor's averments that the contract was a draft and defences placed before the Sole Arbitrator. Noting the law that pendency of challenge to an award may qualify as a pre-existing dispute, the Tribunal finds that in the present case there is no pending challenge to the Award; consequently the existence of the Award (passed after hearing both sides) and absence of a challenge preclude treating the matter as a pre-existing dispute that would defeat the petition under section 9. [Paras 21, 22, 23, 29, 37]

Objection of pre-existing dispute rejected; petition not barred on that ground.

Authority of constituted attorney and power of attorney to file insolvency petition - The Operational Creditor's petition is not defective for want of authorization; the constituted attorney validly delegated authority to the named signatory who filed the petition. - HELD THAT: - The Tribunal considers the Board Resolution appointing a constituted attorney and the subsequent Power of Attorney authorising Mr. Nirav Dilip Gandhi as constituted attorney. Relying on precedent that an authorised person may initiate proceedings where duly empowered by the board (and that the board-authorised officer may appoint substitutes as authorised), the Tribunal holds that the petition is properly signed and that the challenge to the authority of the signatory is unsustainable. [Paras 31, 33, 39, 40, 41]

Objection to competency of the signatory overruled; petition held competent.

Admission of petition under section 9 of the Insolvency & Bankruptcy Code, 2016 - initiation of corporate insolvency resolution process and imposition of moratorium - The section 9 petition is admitted, CIRP is initiated against the Corporate Debtor, a moratorium is imposed, and an Interim Resolution Professional is appointed. - HELD THAT: - Having found the petition complete, the Tribunal records that the Operational Creditor has established default above the monetary threshold and complied with statutory requirements including the demand notice and affidavit. The Tribunal therefore admits the petition under section 9, directs initiation of CIRP, imposes moratorium in terms of section 14, directs public announcement, appoints the proposed IRP to carry out duties under the Code and gives ancillary directions regarding vesting of management, filing of information, deposit for public notice expenses and communication of the order. [Paras 42, 43, 44]

Petition admitted; CIRP ordered, moratorium imposed and IRP appointed.

Final Conclusion: The Tribunal admits the section 9 petition by the Operational Creditor, holds that (i) the Adjudicating Authority has jurisdiction, (ii) although foreign awards are enforceable in India only after satisfaction of statutory tests, on the admitted facts (reciprocating-territory status and no challenge pending) the Award does not constitute a pre-existing dispute preventing admission, (iii) the petitioning signatory was properly authorised, and consequently orders initiation of CIRP against the Corporate Debtor, imposes the statutory moratorium and appoints the Interim Resolution Professional.

Default under Insolvency and Bankruptcy Code - admission of Section 9 petition - CIRP initiation threshold - requirement of statutory demand notice and limitation - appointment of Interim Resolution Professional - declaration of moratorium - reliance on Innoventive Industries and Mobilox Innovations principles

Default under Insolvency and Bankruptcy Code - admission of Section 9 petition - requirement of statutory demand notice and limitation - CIRP initiation threshold - The Section 9 I.B. Petition filed by the operational creditor is maintainable and admissible and the corporate debtor is in default triggering initiation of CIRP. - HELD THAT: - The Tribunal found that goods (M.S. angle) were procured, delivered and utilised by the corporate debtor and that the corporate debtor did not raise any contemporaneous objection as to quality or price. The petitioner produced invoices, delivery challans, ledger entries and statutory demand notice in Form Nos. 3 and 4. It was noted that part payment had been made leaving an outstanding sum of Rs. 9,42,841/- as on 22.09.2017, which exceeds the monetary threshold for initiation of CIRP. The demand notice was issued and the petition was filed within limitation. Applying the settled tests in Innoventive Industries and Mobilox Innovations, the Adjudicating Authority held that debt was established and default had occurred and that the petition was complete and liable to be admitted. [Paras 19, 21, 22, 28]

The I.B. Petition under Section 9 is admitted.

Appointment of Interim Resolution Professional - The proposed Insolvency Professional is fit to be appointed as Interim Resolution Professional and is appointed accordingly. - HELD THAT: - The petitioner proposed Mr. Shalabh Kumar Daga as Interim Resolution Professional. He furnished his consent and a declaration that no disciplinary proceedings were pending against him. On that basis the Tribunal appointed him as IRP and directed him to make the public announcement and to act in accordance with the provisions of the Code, including relevant duties and timelines. [Paras 21, 24]

Mr. Shalabh Kumar Daga is appointed as Interim Resolution Professional.

Declaration of moratorium - A moratorium is declared from the date of the order until completion of the CIRP with the statutory prohibitions specified under the Code. - HELD THAT: - Pursuant to admission of the petition, the Adjudicating Authority declared moratorium effective from the date of the order until completion of the Corporate Insolvency Resolution Process. The order enjoins the prohibitions set out in the Code, including institution or continuation of suits or proceedings, transfer or disposal of assets, enforcement of security interests, and recovery of property in possession of the corporate debtor, and preserves supply of essential goods and services as specified. [Paras 25]

Moratorium declared with effect from the date of the order until completion of CIRP.

Final Conclusion: The Tribunal admitted the Section 9 petition on the finding of established debt and default, appointed the proposed Interim Resolution Professional and declared moratorium, directing the IRP to proceed with the CIRP in accordance with the Code.

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Appointment of Liquidator under Section 34 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' recommendation for liquidation - Role of Resolution Professional as facilitator and not an adjudicator of claims - Adjudicating Authority's power to replace the Liquidator and to seek IBBI's proposal of alternative Insolvency Professionals

Liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' recommendation for liquidation - Order for liquidation of the Corporate Debtor M/s. Bhatia Global Trading Limited was to be passed. - HELD THAT: - The Adjudicating Authority recorded that the Committee of Creditors (CoC), by requisite majority and with 100% voting at its meeting, recommended liquidation after no resolution plan could be accepted within the maximum period permissible under the Code. The Tribunal considered the papers, the sequence of meetings, the advertisement for expressions of interest, the receipt and rejection of the lone resolution plan, and the expiry of the CIRP timeline; it held that the application under Section 33 was merited and directed that the Corporate Debtor be liquidated. The order implements the statutory scheme whereby, upon a valid CoC recommendation and expiry of the resolution process, liquidation can be ordered by the Adjudicating Authority. [Paras 10]

Application under Section 33 was allowed and the Corporate Debtor was ordered to be liquidated.

Appointment of Liquidator under Section 34 of the Insolvency and Bankruptcy Code, 2016 - Role of Resolution Professional as facilitator and not an adjudicator of claims - Adjudicating Authority's power to replace the Liquidator and to seek IBBI's proposal of alternative Insolvency Professionals - Appointment of the existing Resolution Professional as Liquidator, subject to reconsideration of his continuance in light of objections and supervisory power of the Adjudicating Authority. - HELD THAT: - The Tribunal initially appointed the Resolution Professional as Liquidator pursuant to Section 34(1) following the CoC's resolution to appoint him. The Tribunal also noted established law that the RP does not have adjudicatory power over claims but only collates and places claims before the CoC. Given objections by a claimant raising concerns about the RP's impartiality in handling claims, the Adjudicating Authority exercised its supervisory power under Section 34(4) to direct the CoC to reconsider its recommendation and formally requested the IBBI to propose two alternative Insolvency Professionals. The CoC was directed to evaluate those candidatures along with the present RP's candidature and to make a fresh, conscious recommendation in accordance with relevant Supreme Court guidance to ensure transparency, fairness and to allay concerns of bias before finalising the Liquidator.

The RP was appointed as Liquidator pursuant to the CoC recommendation, but the CoC was directed to reconsider the appointment and the IBBI was requested to propose two alternative Insolvency Professionals for the CoC's fresh consideration.

Final Conclusion: The Tribunal ordered liquidation of M/s. Bhatia Global Trading Limited under Section 33 of the IBC and appointed the incumbent Resolution Professional as Liquidator under Section 34, while directing the CoC to reconsider that appointment in view of objections and requesting the IBBI to propose alternate candidates so that the CoC may make a fresh recommendation ensuring transparency and fairness in the liquidation process.

Financial creditor - Financial debt - Default under Section 4 - Admissibility of Section 7 application - Moratorium under Section 14 - Appointment of Interim Resolution Professional - Section 60(5) fraud allegation

Financial creditor - Financial debt - Applicant is a Financial Creditor and the claimed outstanding is a financial debt. - HELD THAT: - The Tribunal examined the assignment agreement dated 29.09.2017 and the surrounding material and held that the debt originally owed to the original lender was legally assigned to the applicant. On a plain reading of the definition, a person to whom a financial debt has been legally assigned qualifies as a "financial creditor" and the outstanding dues claimed by the applicant fall within the definition of "financial debt". Accordingly, the contention that the applicant is not a financial creditor or that the amount claimed is not a financial debt was rejected. [Paras 32, 33, 34]

Applicant is a Financial Creditor and the claimed outstanding is a financial debt.

Default under Section 4 - Admissibility of Section 7 application - There is a default in repayment sufficient to trigger admission under Section 7 and the Section 7 application is complete and maintainable. - HELD THAT: - The Tribunal noted that the corporate debtor admitted that the loan taken from the original lender was assigned to the applicant and that part payments were made but payments stopped thereafter. Applying the settled scheme that the adjudicating authority need only be satisfied from records or evidence that a default has occurred, the Tribunal found that the documents on record, including the statement of accounts and assignment, demonstrate default. The petition met the formal requirements (including proposal and acceptance of an IRP and no disciplinary proceedings against the IRP) and the claimed default exceeded the statutory monetary threshold; hence the application under Section 7 was held maintainable and fit for admission. [Paras 35, 36, 37, 38]

Default established on the record; Section 7 application is maintainable and admitted.

Moratorium under Section 14 - Appointment of Interim Resolution Professional - CIRP is initiated by admitting the petition; moratorium is imposed and an Interim Resolution Professional is appointed. - HELD THAT: - Upon admission under Section 7(5)(a), the Tribunal directed commencement of the corporate insolvency resolution process and applied the statutory moratorium provisions to stay specified suits, proceedings and actions and to protect assets and supply of essential goods/services. The Tribunal appointed the proposed Insolvency Professional as IRP and directed compliance with the relevant provisions and regulations governing the IRP's duties and expenses. [Paras 39, 40, 41]

Petition admitted; moratorium imposed; Interim Resolution Professional appointed and directed to act in accordance with the Code.

Section 60(5) fraud allegation - The corporate debtor's plea under Section 60(5) alleging fraud by the financial creditor is not maintainable and is rejected. - HELD THAT: - The Tribunal considered the corporate debtor's assertion of fraud and its reliance on authorities permitting inquiry into fraud in insolvency proceedings, but concluded on the evidence and the pleadings that the grounds relied upon did not sustain a claim that would justify rejection of the Section 7 application or initiation of proceedings under Section 60(5). The prayer for action under Section 60(5) was therefore rejected. [Paras 42, 43]

Prayer for action under Section 60(5) alleging fraud is rejected.

Final Conclusion: The Company Petition under Section 7 is admitted and the corporate insolvency resolution process is initiated; a moratorium under the Code is declared and the nominated Insolvency Professional is appointed as IRP. The corporate debtor's contention alleging fraud under Section 60(5) is rejected and the Registry is directed to communicate the order to the parties and the IRP.

Existence of dispute under Section 8(2) of the IBC - inability to raise a belated dispute (Mobilox principle) - operational creditor's compliance with Section 9(3) requirements - effect of part-payment on limitation under Section 19 of the Limitation Act - admission of application under Section 9 and commencement of CIRP - moratorium under Section 14 of the IBC

Existence of dispute under Section 8(2) of the IBC - inability to raise a belated dispute (Mobilox principle) - Whether the Corporate Debtor raised a valid notice of dispute within the ten-day period under Section 8(2) and whether belatedly raised disputes can be entertained. - HELD THAT: - The Tribunal held that Section 8(2) requires the corporate debtor to bring to the operational creditor's notice any existence of dispute or record of pendency of suit/arbitration within ten days of receipt of the demand notice. Since the Corporate Debtor admitted it did not reply to the demand notice within that period, the Tribunal applied the principle that disputes raised belatedly in the reply to the Section 9 application cannot be entertained. The Tribunal relied on the statutory scheme of Sections 8 and 9 read together and endorsed the approach that a party cannot first ignore the Section 8 notice and thereafter raise the dispute at the objection stage; hence the belated contentions of dispute were held not to preclude admission of the Section 9 application. [Paras 14, 15, 16, 17, 24]

The belatedly raised disputes by the Corporate Debtor are not maintainable; no notice of dispute within ten days was proved and the contention of dispute does not preclude admission of the Section 9 application.

Effect of part-payment on limitation under Section 19 of the Limitation Act - Whether the Section 9 application was barred by limitation or was within time in view of the last payment by the Corporate Debtor. - HELD THAT: - The Tribunal found that the last payment made by the Corporate Debtor on 18 January 2017 restarted the limitation period under Section 19 of the Limitation Act. Applying the principle that payment on account of a debt freshens the limitation period, the Tribunal counted limitation from the date of that payment and observed that the Section 9 application filed in September 2019 fell within three years from the last payment. Accordingly, the plea that the application was time-barred was rejected. [Paras 19, 20, 21, 22, 23]

The application is within limitation; limitation runs from the date of the last part-payment (18 January 2017) and the petition filed in 2019 is timely.

Operational creditor's compliance with Section 9(3) requirements - admission of application under Section 9 and commencement of CIRP - Whether the Section 9 application was complete and satisfied the requirements for admission under Section 9(5)(i), including absence of payment and delivery of the invoice/demand notice. - HELD THAT: - The Tribunal examined the material and filings and recorded that the operational creditor had furnished the requisite affidavit and documents as required under Section 9(3). It noted the admitted receipt of the demand notice by the Corporate Debtor and the absence of any reply within the statutory ten-day period. The Tribunal was satisfied that there was no payment of the unpaid operational debt and that the application was complete; consequently the criteria in Section 9(5)(i)(a) to admit the application were met. [Paras 10, 14, 24]

The Section 9 application is complete, there is no payment of the unpaid operational debt, and the petition is liable to be admitted.

Moratorium under Section 14 of the IBC - appointment of interim resolution professional and CIRP implementation - Reliefs to be granted on admission of the Section 9 application, including imposition of moratorium and appointment of an interim resolution professional (IRP). - HELD THAT: - On admitting the application, the Tribunal directed that a moratorium in terms of Section 14 operate forthwith, restraining institution or continuation of suits, transfer or disposal of assets and related actions. The Tribunal appointed an IRP empanelled with the IBBI and directed the IRP to perform mandated functions under the Code. The operational creditor was directed to deposit an amount to meet immediate IRP expenses, to be accounted for and later reimbursed as CIR costs. [Paras 25, 26, 27, 28]

Moratorium ordered with immediate effect; an IRP was appointed and instructed to carry out statutory duties; operational creditor to deposit funds for IRP's immediate expenses.

Final Conclusion: The Tribunal admitted the Section 9 petition: no valid notice of dispute was shown within ten days, the application was within limitation by virtue of the last part-payment, the Section 9 filing was complete and the criteria for admission satisfied; a moratorium was imposed and an IRP appointed to commence the CIRP.

Locus standi of a secured creditor to challenge termination of contract - interpretation and interplay of contractual empowerment to assign/subrogate and contractual event of default - jurisdiction of Adjudicating Authority under section 60(5)(c) of the I&B Code to decide questions arising in liquidation - protection of secured creditor's right to realise secured asset as ongoing concern under section 52 of the I&B Code - injunction against exercise of contractual termination pending realization of secured asset

Locus standi of a secured creditor to challenge termination of contract - interpretation and interplay of contractual empowerment to assign/subrogate and contractual event of default - The secured creditor has locus standi to challenge the termination notice issued under the PPA. - HELD THAT: - The Tribunal found that although the applicant is not a direct party to the PPA, Article 12.9 of the PPA recognises and contemplates rights of the financing parties (secured creditors) to cause assignment, sale or lease of the Project and to have any assignee assume the rights and obligations arising thereafter. The liquidator did not dispute the applicant's status as secured creditor with security over the Bhadrada Project and its cash flows. In view of Article 12.9, the applicant is entitled to take shelter under that provision and therefore has sufficient interest to challenge the termination issued by GUVNL. [Paras 19]

Applicant, as secured creditor, has locus standi to maintain the challenge to the termination notice.

Interpretation and interplay of contractual empowerment to assign/subrogate and contractual event of default - Article 12.9 of the PPA operates upon occurrence of the event of default in Article 9.2.1(e); the two provisions are not independent and Article 12.9 governs the relief available to financing parties after such default. - HELD THAT: - The Tribunal rejected GUVNL's submission that Article 9.2.1(e) and Article 12.9 operate in entirely different fields. It held that occurrence of an event of default under Article 9.2.1(e) brings Article 12.9 into play, since Article 12.9 explicitly recognises financing parties' rights to assignment, sale or lease of the Project and to have successors assume obligations under the PPA. Thus Article 9.2.1(e) cannot be applied in a manner that negates the contractual recognition afforded to financing parties by Article 12.9. [Paras 20, 21]

Article 12.9 is operative on occurrence of the default under Article 9.2.1(e), and Article 9.2.1(e) is not to be treated as independent of Article 12.9.

Jurisdiction of Adjudicating Authority under section 60(5)(c) of the I&B Code to decide questions arising in liquidation - protection of secured creditor's right to realise secured asset as ongoing concern under section 52 of the I&B Code - The Tribunal has jurisdiction under section 60(5)(c) of the I&B Code to entertain the applicant's challenge to the termination notice issued during liquidation and to decide questions affecting realization of secured assets. - HELD THAT: - The Adjudicating Authority's jurisdiction under section 60(5)(c) extends to any question of law or fact arising out of or in relation to insolvency resolution or liquidation proceedings. The termination of the PPA was issued when the corporate debtor was under liquidation and directly affects the secured creditor's ability to realize the asset as an ongoing concern. Section 52(5) enables a secured creditor to approach the Adjudicating Authority where resistance affects realization; the Tribunal held that termination of the PPA impairs maximisation of value since the asset fetches maximum value when sold as a going concern and allowed the application to be entertained by the Adjudicating Authority. [Paras 25, 27, 28]

Tribunal has jurisdiction under section 60(5)(c) to adjudicate the challenge and to protect the secured creditor's rights under section 52 where termination during liquidation would impede realization as an ongoing concern.

Injunction against exercise of contractual termination pending realization of secured asset - protection of secured creditor's right to realise secured asset as ongoing concern under section 52 of the I&B Code - The termination notice dated 30.08.2019 issued by GUVNL is set aside and GUVNL is restrained from acting on it pending disposal of the secured asset by the applicant under SARFAESI. - HELD THAT: - Applying the objectives of the Code to maximise the value of assets, the Tribunal held that termination of the PPA solely because the corporate debtor is in liquidation would impede maximisation since the power plant's value depends on continued generation and supply under the PPA. On that basis, and having recognised the secured creditor's rights under Article 12.9 and section 52, the Tribunal set aside the impugned termination notice and directed that the applicant be permitted to dispose of the secured asset under the SARFAESI Act, while restraining GUVNL from proceeding pursuant to the termination notice during that process. [Paras 28, 33]

Termination notice dated 30.08.2019 set aside; GUVNL restrained from acting on that notice pending realization/disposal of the secured asset by the applicant.

Final Conclusion: The Tribunal held that the secured creditor has standing to challenge the PPA termination, that Article 12.9 operates on occurrence of the default in Article 9.2.1(e) and protects financing parties' rights, that the Adjudicating Authority has jurisdiction under section 60(5)(c) to decide the dispute in liquidation, and consequently set aside the termination notice dated 30.08.2019 and restrained GUVNL from acting thereon while permitting the applicant to realise the secured asset under SARFAESI.

Financial debt - default - admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - pre-existing dispute - allegation of fraud - initiation of corporate insolvency resolution process - appointment of Interim Resolution Professional - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016

Financial debt - default - admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - The Application under Section 7 was admissible because a financial debt was due and the corporate debtor had committed default. - HELD THAT: - The Tribunal examined the loan agreements, demand promissory notes, letters of confirmation and renewal of limits and observed that these documents are records borne on file establishing the existence of credit facilities granted and obligations of the corporate debtor. The Financial Creditor's accounts and the declaration of the account as NPA were relied upon to show the outstanding amounts and default. The Tribunal held that the corporate debtor's mere allegations denying fraud, without concrete evidence contradicting the documents, did not absolve it of repayment obligations. Having found that there was a financial debt and default and that the application was complete and within limitation, the Tribunal was obligated to admit the Section 7 application and trigger CIRP. [Paras 16, 18, 19]

Application admitted under Section 7; CIRP to be initiated.

Pre-existing dispute - allegation of fraud - The objections based on alleged fraud and pre-existing disputes were rejected and held insufficient to defeat the Section 7 application. - HELD THAT: - The corporate debtor alleged multiple forgeries, suppression of documents and prior private suits/writs. The Tribunal noted that these were largely allegations unsupported by concrete evidence that would negate the existence of the debt or demonstrate a bona fide dispute of law or fact preventing admission. Reliance was placed on precedent recognizing that where a financial debt and default are prima facie established, mere averments of fraud or private disputes do not defeat an application under Section 7. Consequently, the objections were held to be hypothetical and illusory and were rejected. [Paras 16, 17]

Objections on grounds of alleged fraud and pre-existing dispute rejected.

Appointment of Interim Resolution Professional - The proposed Interim Resolution Professional was appointed to manage the CIRP. - HELD THAT: - The Financial Creditor proposed CA Swaminathan Prabhu and filed the prescribed written communication in the required form. The Tribunal appointed the proposed practitioner as Interim Resolution Professional and directed him to perform statutory duties under the Code and submit reports within the stipulated period. [Paras 20]

CA Swaminathan Prabhu appointed as Interim Resolution Professional.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - A moratorium under Section 14 came into effect upon admission of the Section 7 application. - HELD THAT: - Upon admission of the application, the Tribunal declared the moratorium specified under Section 14, restraining institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property by owners/lessors, subject to the exceptions and duration set out in the Code. The Tribunal directed communication of the order to the parties, IBBI and Registrar of Companies as required. [Paras 21, 24]

Moratorium imposed with effect from the date of the order until completion of CIRP (subject to Code's provisions).

Final Conclusion: The Tribunal admitted the Financial Creditor's Section 7 application, found that a financial debt and default existed, rejected the corporate debtor's allegations of fraud and pre-existing dispute as insufficient, appointed the nominated Interim Resolution Professional and imposed the statutory moratorium. A copy of the order is to be communicated to the parties, IBBI and the Registrar of Companies.

Condonation of delay in filing claim in liquidation proceedings - appeal against liquidator's decision under Section 42 of the IBC, 2016 - 14 day limitation - time bound nature of liquidation and liquidator's obligation to conclude within one year - verification and admission/rejection of claims by the liquidator - operational creditor status of tax authorities

Typographical correction of statutory provision in pleadings - The application to amend the reference to the statutory provision in MA/533/2018 from Section 60(5) to Section 42 of the IBC, 2016 was allowed. - HELD THAT: - The Tribunal accepted that the wrong section cited in the title of MA/533/2018 was a typographical error. The limited amendment sought in MA/1294/2019 to replace the incorrect reference with Section 42 of the IBC, 2016 was permitted and the corrected filing was taken on record. [Paras 3]

MA/1294/2019 allowed; MA/533/2018 is taken to have been filed under Section 42 of the IBC, 2016.

Condonation of delay in filing claim in liquidation proceedings - appeal against liquidator's decision under Section 42 of the IBC, 2016 - 14 day limitation - time bound nature of liquidation and liquidator's obligation to conclude within one year - The application challenging the liquidator's refusal to process a belated claim and seeking condonation of delay was dismissed for want of delay and absence of a specific condonation application within the statutory time. - HELD THAT: - The Tribunal found that the claimant submitted its Form F after the last date fixed by the liquidator and thereafter delayed by more than five months in approaching the Adjudicating Authority under Section 42, which prescribes a 14 day window to appeal against the liquidator's decision. No separate application for condonation of delay in filing the appeal was placed before the Tribunal. The decision relied on the mandatory, time bound scheme of the IBC and the requirement that limitation be observed, noting precedents that liquidation processes must be completed within the statutory timeframe and that in absence of sufficient cause, delay cannot be condoned. [Paras 5, 10, 11, 12]

MA/533/2018 dismissed for failure to seek condonation and for inordinate delay in filing the appeal against the liquidator's decision; dismissal without costs.

Operational creditor status of tax authorities - The Tribunal recognised that the Applicant (a tax authority) is an operational creditor for the purposes of the IBC framework. - HELD THAT: - Relying on the NCLAT decision cited in the application, the Tribunal noted that similarly placed tax authorities are treated as operational creditors under the Code. The point was treated as not being in dispute for the purposes of the present proceedings. [Paras 8]

The Applicant is treated as an operational creditor within the meaning of the IBC for the purposes of these proceedings.

Final Conclusion: The correction to the statutory reference in MA/533/2018 was allowed and taken on record as filed under Section 42 of the IBC, 2016. The substantive application seeking condonation and processing of a belated claim was dismissed for inordinate delay and for failure to seek condonation of the delayed appeal within the statutory 14 day period, the dismissal being without costs.

Admission of Section 7 application - default under the Insolvency and Bankruptcy Code - debt and financial debt - completeness of application under the Rules / Form 1 - appointment of interim resolution professional - moratorium under Section 14 of the Code - continuation of supply of essential goods and services during moratorium

Admission of Section 7 application - default under the Insolvency and Bankruptcy Code - debt and financial debt - completeness of application under the Rules / Form 1 - The Section 7 petition filed by the financial creditor is complete and is liable to be admitted as there is a financial debt and default by the corporate debtor. - HELD THAT: - The Tribunal examined the records and documentary evidence produced by the applicant, including the loan agreement, statements of account, foreclosure statement, repayment schedule, and notices, and found that the corporate debtor had not replied though given opportunities and that its counsel admitted the debt. Applying the principles in Innoventive Industries and Mobilox Innovations, the adjudicating authority was satisfied that a 'debt' and a default existed for purposes of Section 7 and that the application complied with the prescribed form and requirements under the Rules (Form 1). Consequently, the petition was held complete and admissible and there was no ground to reject or dismiss it. [Paras 12, 14, 15, 17, 18]

The Section 7 application is admitted as complete; there is a financial debt and a default by the corporate debtor.

Appointment of interim resolution professional - An interim resolution professional is to be appointed from among the names proposed by the financial creditor. - HELD THAT: - The application proposed a resolution professional and enclosed the requisite Form 2 declaration. Having found the Section 7 application complete and the petitioner to be a financial creditor, the Tribunal exercised its power to appoint the proposed professional as interim resolution professional, noting the declaration that no disciplinary proceedings are pending against him. [Paras 16]

Mr. Navin Khandelwal is appointed as the interim resolution professional.

Moratorium under Section 14 of the Code - continuation of supply of essential goods and services during moratorium - A moratorium is to be declared under Section 14, with protection for continuation of supply of goods and essential services. - HELD THAT: - On admission of the Section 7 petition and until completion of the corporate insolvency resolution process (or approval of a resolution plan or order for liquidation), the Tribunal declared the moratorium prohibiting institution or continuation of suits or proceedings, transfer or disposal of assets, actions to enforce security interests and recovery of property in the possession of the corporate debtor. The Tribunal further directed that ongoing supplies of goods and essential services shall not be terminated, suspended or interrupted during the moratorium, subject to statutory exceptions. [Paras 19, 20, 21]

Moratorium declared under Section 14 with a direction that continuing supplies of goods and essential services shall not be terminated during the moratorium.

Final Conclusion: The petition under Section 7 is admitted: the Tribunal found a financial debt and default, appointed the proposed interim resolution professional, and declared the statutory moratorium with protection for ongoing supply of goods and essential services; the petition is disposed of with no order as to costs.

Maintainability of writ challenging ECIR under Article 226 - Territorial jurisdiction under section 44 of the Prevention of Money Laundering Act - Duty to inform arrested person of grounds of arrest under section 19(1) PMLA - Interim bail on medical grounds - Procedural remedy of deletion of unnecessary party

Procedural remedy of deletion of unnecessary party - Deletion of respondent No.2/NCT of Delhi from the array of party respondents - HELD THAT: - The Court found respondent No.2/NCT of Delhi not to be a necessary party to the petition and ordered that respondent No.2 be deleted from the array of party respondents. The petitioner was directed to file an amended memo of parties before the next date.

Respondent No.2 deleted; amended memo of parties to be filed.

Exemption from filing certified copy - Application for exemption from filing the certified copy - HELD THAT: - The petition for exemption was considered and allowed subject to just exceptions. The application was disposed of accordingly.

Exemption allowed, subject to just exceptions; application disposed of.

Maintainability of writ challenging ECIR under Article 226 - Territorial jurisdiction under section 44 of the Prevention of Money Laundering Act - Preliminary objection on territorial jurisdiction and maintainability to be examined by respondent No.1 by filing a status report - HELD THAT: - The ED raised a preliminary objection contending that because the offences were committed in Mumbai and by virtue of section 44 of the PMLA the jurisdictional court is the Special Judge, Mumbai (and appeals/revisions lie before the Bombay High Court), the present petition before this Court was said to be not maintainable. The petitioner countered that because the ECIR was recorded in Delhi and quashing of proceedings arising from that ECIR was sought, Article 226 jurisdiction remained available. The Court did not decide the contested jurisdictional question on merits; instead it issued notice and directed the ED to file a status report on the preliminary objection as to territorial jurisdiction within three days, with advance copy to opposing counsel.

Notice issued; ED to file status report on territorial jurisdiction within three days.

Interim bail on medical grounds - Petition for interim bail on medical grounds directed to be considered on filing of a status report by the ED - HELD THAT: - The petitioner sought interim bail by reason of his medical condition. The Court issued notice and directed the ED to file a status report on the medical grounds cited by the petitioner within three days, with advance copy to opposing counsel. The matter was listed for further consideration on the specified date.

Notice issued in petition for interim bail; ED to file status report on medical grounds within three days.

Procedure for informing grounds of arrest under section 19(1) PMLA - Allegation that the ED did not inform the petitioner in writing of the grounds of arrest as required by law recorded and noted for adjudication - HELD THAT: - The petitioner contended that the ED had not complied with the statutory requirement to inform him in writing of the grounds for his arrest under section 19(1) PMLA, and that the arrest was therefore illegal making consequent remand orders untenable. The Court recorded these contentions and issued notice; it has not adjudicated the legal merits of that contention in the present order and instead directed relevant status reports and listed the matter for further hearing.

Allegation recorded; notice issued and matter listed for further consideration.

Final Conclusion: The Court allowed the exemption application, deleted respondent No.2 from the array of parties and directed service of notice. The ED was ordered to file two separate status reports - on the preliminary objection as to territorial jurisdiction and on the medical grounds for interim bail - within three days, with advance copies to opposing counsel; the matters were listed for further hearing on the specified date.

Short-payment of service tax - reimbursable expenses as pure agent - service tax liability on reimbursed actual expenses - exercise of discretion under section 80 of the Finance Act, 1994 - application of Supreme Court decision in Union of India v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd.

Short-payment of service tax - exercise of discretion under section 80 of the Finance Act, 1994 - Whether penalty should be sustained for alleged short-payment of service tax for Oct.'08 to Dec.'08 - HELD THAT: - The adjudicating authority recorded that the appellant had paid the service tax and filed returns for the period in question and that only a balance remained as calculated by the authority. The Tribunal noted that the appellant had discharged the service tax for the said period before issuance of the show-cause notice. In view of that factual position, the imposition of penalty in respect of the short-payment was held to be unwarranted. Invoking the exercise of discretion under section 80 of the Finance Act, 1994, the Tribunal set aside the penalty while leaving intact the obligation to pay the remaining balance with interest. [Paras 7]

Penalty set aside; appellant must pay the remaining balance with interest if not already paid.

Reimbursable expenses as pure agent - service tax liability on reimbursed actual expenses - application of Supreme Court decision in Union of India v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. - Whether service tax is leviable on reimbursable actual expenses claimed to have been incurred as a pure agent for Apr.'06 to Mar.'08 - HELD THAT: - The show-cause notice and records indicated that the demand related to expenditure incurred by the appellant as a pure agent and subsequently reimbursed by customers. Applying and following the Supreme Court's decision in Union of India v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. , the Tribunal held that service tax could not be sustained on such reimbursed actual expenses and therefore the demand required to be set aside. [Paras 8]

Demand in respect of service tax on reimbursable expenses set aside.

Final Conclusion: Appeal partly allowed: penalty relating to the short-payment for Oct.'08 to Dec.'08 is set aside; demand for service tax on reimbursable expenses for Apr.'06 to Mar.'08 is set aside; appellant remains liable to pay the balance amount of Rs. 9,073/- with interest if not already discharged.

Summary order. Appeals dismissed as withdrawn on account of filing a declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, with liberty to the appellant to apply for restoration of the appeals if a discharge certificate is not issued for the dispute.

Jurisdiction of Single Member Bench - scope of Section 35D(3) of the Central Excise Act, 1944 - jurisdiction to decide interest irrespective of monetary limit - distinction between duty/penalty/fine and interest for bench competence - video conferencing hearing under Public Notice No. 2

Jurisdiction of Single Member Bench - scope of Section 35D(3) of the Central Excise Act, 1944 - jurisdiction to decide interest irrespective of monetary limit - distinction between duty/penalty/fine and interest for bench competence - Single Member Bench of the Tribunal has jurisdiction to decide a dispute confined to interest irrespective of the monetary amount involved. - HELD THAT: - The Tribunal examined Section 35D(3) and concluded that its exclusion of cases for single-member disposal is expressly tied to disputes concerning rate of duty, value of goods for assessment, or where the duty or the fine/penalty involved exceeds the prescribed monetary threshold. The provision does not mention interest as a barred category. Relying on the wording of the statute and the Tribunal's earlier reasoning in Dhampur Sugar Mills Ltd., the Bench held that mere disputes relating only to interest are not excluded from single-member jurisdiction. Decisions cited by the Revenue (including the Karnataka High Court decision in Reva Electric Car and the Deep Construction Co. matter) were examined and distinguished on their facts: they involved refund claims or penalties where the principal monetary element fell within the exclusion clause. The Tribunal also applied the principle that words cannot be read into the statute to extend the exclusion to interest; any legislative change would be for the legislature. Having considered the authorities and the statutory scheme, the Bench held that the Single Member Bench may adjudicate interest claims irrespective of amount. [Paras 10, 11, 16, 17]

Objection overruled; Single Member Bench has jurisdiction to decide the issue of interest irrespective of any amount.

Video conferencing hearing under Public Notice No. 2 - Permissibility of the respondent's request for hearing by video conferencing under Public Notice No. 2 dated 10.08.2020. - HELD THAT: - The Tribunal considered the Public Notice and the parties' submissions on e hearing. It held that, in terms of Public Notice No. 2, any party desirous of getting an appeal heard by video conferencing may send a request by e mail, and there was no bar to the respondent making such a request. The Bench therefore accepted the respondent's request for virtual hearing under the cited public notice. [Paras 4]

Request for hearing by video conferencing under Public Notice No. 2 was accepted; no bar on respondent seeking e hearing.

Final Conclusion: The Tribunal held that a Single Member Bench is competent to adjudicate appeals limited to interest irrespective of the amount involved, and that the respondent could properly seek hearing by video conferencing under Public Notice No. 2; the matter was listed for final hearing on 27.10.2020.

Regular bail under Section 439 Cr.P.C - custodial interrogation and effective investigation - director's responsibility for company transactions - dishonour of cheques and parallel proceedings under Negotiable Instruments Act - falsity of representations and sham company

Regular bail under Section 439 Cr.P.C - director's responsibility for company transactions - dishonour of cheques and parallel proceedings under Negotiable Instruments Act - falsity of representations and sham company - custodial interrogation and effective investigation - Application for grant of regular bail to the applicant in respect of offences alleged under Sections 420, 406 and 409 read with 34 IPC (crime no.239/2020). - HELD THAT: - The Court refused bail after considering the prosecution case and materials on record. The applicant admitted issuance of two cheques which were dishonoured and prosecution has filed a parallel proceeding under the Negotiable Instruments Act; the applicant's explanation under that proceeding is to be tested in trial. Documents relied on by the applicant did not establish a valid executed agreement with the international companies; a non-disclosure agreement was held not to amount to a formal binding contract. The Court observed that the company purported to have business tie-ups and permissions, yet no tangible business activity has been shown and some papers (including a permission letter) contained representations inconsistent with the applicant's admitted qualifications and status. The applicant, as a director of the company, could not disclaim responsibility for financial transactions and receipts merely by attributing finance matters to a co-accused. Delay in lodging the FIR was considered and found to be satisfactorily explained by the prosecution. One co-accused remained at large, and the Court recorded that effective investigation required separate and joint custodial interrogation of both accused to ascertain the truth. Custody since a particular date was held not to be by itself a sufficient ground for bail. On these cumulative considerations the Court concluded that release on bail was not warranted at this stage.

Bail application under Section 439 Cr.P.C. is rejected; no grant of regular bail to the applicant at this stage.

Final Conclusion: The High Court dismissed the applicant's prayer for regular bail in the criminal case alleging fraud and breach of trust, concluding that the admitted dishonour of cheques, absence of satisfactory documentary proof of legitimate business, inconsistent representations, the need for custodial interrogation of a co-accused and the requirements of effective investigation precluded release on bail at this stage.

Quashing of criminal proceedings under inherent jurisdiction of High Court (Section 482 Cr.P.C.) - Section 138 of the Negotiable Instruments Act - Appreciation of disputed facts at Section 482 stage - Prima facie case and cognizance - Role of the trial court in appreciating evidence

Quashing of criminal proceedings under inherent jurisdiction of High Court (Section 482 Cr.P.C.) - Section 138 of the Negotiable Instruments Act - Appreciation of disputed facts at Section 482 stage - Role of the trial court in appreciating evidence - Whether the petition under Section 482 Cr.P.C. seeking quashment of complaint under Section 138 of the Negotiable Instruments Act should be allowed where the complainant alleges dishonour of cheques and the accused contend that dues were subsequently paid. - HELD THAT: - The High Court examined the pleaded facts and submissions and applied settled Supreme Court principles that when an application under Section 482 Cr.P.C. seeks quashment, the Court should not embark upon an inquiry into disputed facts or the merits of the defence. The Court may verify whether the complaint alleges the ingredients of the offence and whether preconditions for taking cognizance are satisfied, but assessment of evidentiary disputes and credibility of witnesses is a matter for trial. Reliance was placed on Supreme Court authorities holding that findings on disputed facts and inconsistencies in statements are matters for trial or appellate scrutiny and not for summary disposal under Section 482. Since the primary controversy in this petition concerned a disputed factual question-whether the alleged debt was repaid-the High Court declined to adjudicate the factual dispute in exercise of its inherent jurisdiction and held that these contentions are to be tested on evidence before the trial court.

The petition under Section 482 Cr.P.C. is dismissed; the complaint under Section 138 NI Act is not quashed and shall proceed to trial, with the petitioner free to raise all grounds at trial.

Final Conclusion: The High Court dismissed the quashment petition under Section 482 Cr.P.C., holding that disputed factual questions as to settlement of the alleged debt cannot be gone into at the Section 482 stage; the complaint under Section 138 NI Act shall proceed to trial, the petitioner retaining liberty to raise all defences, and the Trial Court was directed to conclude the case within nine months from receipt of this order.